Money Control Place
  • Politics
  • Business
  • Stocks
  • Investing
  • Politics
  • Business
  • Stocks
  • Investing

Money Control Place

Stocks

CEF Share Price Discount is a Sentiment Tool For Gold

by August 17, 2023
August 17, 2023
CEF Share Price Discount is a Sentiment Tool For Gold

ETF investors who are interested in gold have long been able to turn to products like GLD and IAU as ways to invest in gold. Those ETFs buy and sell gold as needed to back the shares of the ETFs, and the amount of their holdings vary with investor demand, which keeps the share price of those ETFs pretty close to their net asset value (NAV).

A much older product, which is still around, is the Sprott Physical Gold and Silver Trust (CEF), which holds the CEF symbol because it was formerly known as the Central Fund of Canada. A different company, Sprott Asset Management, took over the Central Fund of Canada in January 2018.

According to Sprott’s web site, “Sprott Physical Bullion Trust unitholders have the right to redeem for physical metals on a monthly basis, subject to meeting the minimum redemption amount.” So unlike an ETF, whose numbers of shares can expand and contract as needed to meet shifting investor demand, CEF’s assets stay relatively fixed over time, and its shares can trade at a premium or a discount to the NAV. Most of the time, the share price is at a discount to NAV.

Sometimes the amount of that discount gets to an extreme level, as investors form such a pessimistic view of the prospects for precious metal prices that they want to get out urgently, and will even accept a price that is at a steep discount to NAV just to be able to exit. We are seeing one of those conditions right now, with CEF shares priced 5% below NAV.

Such instances are reliably associated with important bottoms for gold prices. However, I need to stress that “associated with” does not necessarily mean that the final price bottom is upon us. An oversold “condition” is not the same thing as a “signal”.

The CEF trust holds both gold and silver. Sprott also operates a separate trust under the symbol PHYS, which holds only gold.

Like CEF, the share price of PHYS also trades are a premium or discount to NAV. Right now, the amount of discount in the shares of PHYS is not as large as that of CEF, which is curious. But it is still a pretty sizable discount to NAV, which eventually ought to matter for gold prices.

0
FacebookTwitterGoogle +Pinterest
previous post
How to Use the A-B-C Corrective Pattern to Improve Your Entry Points
next post
Does “NoGo” for the S&P = NEW Opportunities for Active Investors?

Related Posts

Market Research and Analysis – Part 1: Why...

March 15, 2024

California is Going to Drop a Liquidity Bomb...

July 21, 2023

The Best Five Sectors, #16

April 22, 2025

Jobs In the Spotlight: Stock Market Reverses Course...

April 6, 2024

Soybeans Could be the Next Parabolic Runner

November 16, 2023

The Most Efficient Way To Follow The Markets...

May 18, 2024

BEWARE! META, TSLA, AMZN, MSFT & AAPL Report...

January 27, 2025

A Red Bar on the Homebuilders ETF

August 18, 2023

Microsoft (MSFT) Stock On the Verge of a...

October 25, 2023

Sector Rotation & Seasonality: What’s Driving the Market...

March 1, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Larry Williams on the Fed, Interest Rates & Markets! What’s Next?

    • Analyzing SIL, USO, and NVDA: Could These Bullish Patterns Trigger?

    • Nuclear Power Trio: OKLO, SMR, and CCJ in Focus

    • Trump’s Nuclear Revival Plan Boosts Uranium Prices, Sends US Miners Soaring

    • Group Eleven Announces Appointment of Jasmine Lau as Chief Financial Officer

    • Charbone Hydrogene annonce les resultats financiers T1 2025

    Categories

    • Business (1,221)
    • Investing (2,498)
    • Politics (3,699)
    • Stocks (1,611)
    • Uncategorized (20)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: MoneyControlPlace.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 moneycontrolplace.com | All Rights Reserved