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

Week Ahead: NIFTY May Continue Finding Resistance At...

April 7, 2024

DP Trading Room: Natural Gas (UNG) Bearish Again?

June 18, 2024

PRICE IS KING in Stock Trading!

January 25, 2024

Bullish Tidings: Breadth Rallies, Oil Service Makes its...

July 2, 2023

Salesforce Falls Out of Favor: Trade the Bear...

May 15, 2024

Rates Look Set to Rise as TLT Resumes...

March 18, 2024

The Science and Art of Stock Market Predictions

January 3, 2024

Arista Networks: A Profitable Tech Stock That Has...

November 1, 2023

Beware of Shorts in EXTREME Cycle Lows For...

September 30, 2023

Sector Spotlight: Decoding The S&P’s Monthly Behavior With...

November 28, 2023

    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

    • Fed Watch: Key Bullish Patterns in the S&P 500, Utilities, and Crypto

    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

    • Brunswick Exploration Announces Brokered Private Placement for Gross Proceeds of up to C$2.5 Million, with a Lead Order from a Strategic Investor

    • Drill Contract Awarded for Elizabeth Hill. Technical Visit Completed to Define Drill Targets

    • $2.6M Placement and SPP to fast-track China entry and sales

    • NorthStar Gaming Announces Receipt of Management Cease Trade Order

    Categories

    • Business (1,183)
    • Investing (2,407)
    • Politics (3,699)
    • Stocks (1,553)
    • 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