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#1 Tue, Jun 14, 2011 - 9:14pm
DrScrubb
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CEF.A

Just want to hear out plausible explanation from Turdites as to why there has been a sustained reduction in premium to NAV of "historical" 4-8% to the recent 0 minus 2% discount price to NAV

tks

Edited by: DrScrubb on Nov 8, 2014 - 5:16am
Tue, Jun 14, 2011 - 9:53pm
hawkeye
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CEF premium-discount to NAV

I was at my local coin shop last week and the owner told me that retail sales have practically vanished as to buyers of silver and gold. He called his buyer of silver and was told the same thing. It is possible the premium has disappeared as the psychology of the retail public has switched from bull to bear.........as the demand has dried up the premiums have come out of the market price. This is just an indication that the bubble has vanished and the technical damage to price and market psychology must be rebuilt. In time, as the retail trade returns and silver resumes its uptrend, I would assume that the premium to NAV for CEF will return.

Tue, Jun 14, 2011 - 10:57pm
JoeTiger
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I think it was Harvey Organ

I think it was Harvey Organ who wrote that CEF is taking a disproportionate amount of heat from the EE because it made a new share offering earlier this year (and thus, took more bullion off the market).

Of course, there is no proof of this, but I would not be surprised if that was the case.

"For you did not receive the spirit of bondage again to fear, but you received the Spirit of adoption by whom we cry out, 'Abba, Father.'" -- Romans 8:15
Tue, Jun 14, 2011 - 11:58pm (Reply to #2)
Pax Argentum
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CEF Discount to NAV

hawkeye wrote:

In time, as the retail trade returns and silver resumes its uptrend, I would assume that the premium to NAV for CEF will return.

+1 Agree and have discussed this very point in my own circle of CEF-ers. I'm on the sidelines now only because I believe better bargains are comng. Pax
Wed, Jun 15, 2011 - 7:18pm (Reply to #4)
GregGH
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If you like 24 hours data  on

If you like 24 hours data on $ to Nav ( vs the CEF web site that gives you a once a day #) -- try this - a Google spreadsheet someone did ( I found link on kitco mb ) ... still not sure how they did it - neat ...

https://spreadsheets.google.com/ccc?key=0AsAy8x4Mq0aSdEsyeFFUTERtY2JHZ05...

Harvey had a great chart on $ to NAV a while back -- all things will come to pass .... and normal will return

Greg

Thu, Jun 16, 2011 - 7:47am
hhesse
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cef discount

Just want to hear out plausible explanation from Turdites as to why there has been a sustained reduction in premium to NAV of "historical" 4-8% to the recent 0 minus 2% discount price to NAV

First Post, watching since ZH was a blog, followed Turd here because he has skills and apparent integrity:

CEF premium started down after it announced new share creation (hate when they do that). This I believe is typical of closed end funds. There is a logic to switching into a comparable vehicle on the news of pending share creation and switching back in after the slump. But nothing else is/was like cef - heavy Ag exposure and reasonable premium so I take the ride. The premium has fallen for pslv too as Ag weakness gets expressed twice - first in the nav and again in the prem/disc. I still figure in an Ag melt-up the premium could get extremely positive. I still have miners but worry that in an extreme shtf situation that metal in inventory beats metal that will get dug up someday. I try not to trade -too emotionally draining. The long term is easier to see than whether the summer is dull or exciting. 

Thu, Jun 16, 2011 - 9:46am
stained white shirt
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CEF.A NAV

CEF.A,

The following comes from Harvey Organ's website.

https://harveyorgan.blogspot.com/search?updated-max=2011-06-06T16%3A24%3A00-07%3A00&max-results=7

(courtesy Ed Wener)

Central Fund of Canada

The Central Fund of Canada (CEF) is still selling at a slight discount to NAV. Yesterday it closed at a discount of 3.3% based on London Fixes of $1539.50 (Gold) and $37.22(Silver). However since both metals fell in New York after the London Fix the real closing discount was 1.4% based on $1532.50(Gold) and $36.00(Silver). However a discount is a discount and except for a brief period in 2005 The Central Fund has not traded at a discount during the current bull market. See chart below Why is the Central Fund trading at a discount now? And why are the Sprott Funds both trading at a premium, the Silver fund at a healthy 16.75% premium and the Gold fund at a 2.3% premium? It seems pretty obvious that arbitrageurs could quickly close the gaps between these Sprott funds and CEF for a substantial profit and yet they do not. Why? Over the past year CEF has traded at an average premium of about 7% (the high over 13%). All that changed after the Fund announced a new $360m share offering on Mar 29/11. The drop in the premium is quite normal after a share offering. Typically the new offering is priced at a premium slightly below the average premium for a period immediately preceding the offer. This allows the fund to pay the normal commission fees and still add enough gold and silver to the fund to be accretive to existing shareholders. This concept of accretion does not make sense at first glance. Why sacrifice a nice 10+% premium to get 1% or 2% accretion. In fact Sprott announced that he would not make this sacrifice. No new offers if the shareholder premium had to be sacrificed. However if one thinks longer term the notion does make sense. If one does only one offering the accretion is hardly worthwhile. But consider ten offerings with 1% accretion each. That means a total of 10% extra bullion in the fund than it would otherwise have. That's what accretion does. The fund is backed by more bullion that the buyers of the new offerings pay to existing long term shareholders in order to get in. In the past the CEF premium would recover fairly quickly after an offering and it would hardly ever fall to a discount. And because of the accretion the new NAV is higher than it would otherwise be. Yet this time seems different. Is someone out there (guess who) angry at CEF for the recent offering at a time when the silver market is so tight? Are they rewarding the Sprott Silver Fund for agreeing not to add silver to its holdings. We know these folks go to great lengths to control prices. It would be easy for them to set up a desk to control the price of CEF. After all by keeping CEF at a discount they virtually guarantee no more new offerings. Cheers from Auckland, Ed Wener
ed[dot]na[at]xtra[dot]co[dot]nz
Turd 2012 666 plan
Thu, Jun 23, 2011 - 8:07pm
HappyNow
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The premium is just the buyer's prediction of the future

And once I understood that I stopped buying funds at a more than +2% premium.

I can buy BMG Bullion funds for 0 premium, or wait for the others to be negative.

Swing trade indexed ETFs. Long physical gold, silver, and 1 miner.
Wed, Jul 13, 2011 - 4:14pm
bullwhip29
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CEF finally trading at a slight premium to NAV

eom

Mon, Aug 8, 2011 - 4:04pm
zilverreiger
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WTF CEF closed today -0.5%

WTF CEF closed today -0.5%

Mon, Aug 8, 2011 - 9:54pm (Reply to #10)
Pax Argentum
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Noticed that too. No

Noticed that too. No additional shares added, and trading at a very modest premium of 1.2% in USD. Haven't been keeping track but was the premium higher coming in to today? Looking at the daily chart it started at 24.90 and dropped all day, finishing near the day's low.

Tue, Aug 9, 2011 - 1:05pm
zilverreiger
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today another crazy down day

today another crazy down day for this puppy

I'm holding for now, I hope revenge will be sweet in the end..

5 day P&L:

CEF -2.35 % (50/50 gold/silver)

GLD +7.16 %

SLV -4.76%

Wed, Aug 31, 2011 - 1:06am
Tringo
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Current Discount

Just taking my first look at CEF. It appears that the discount has held. -1.33% at the moment. Is the general thought that the EE is maintaining pressure on the fund, even after several months? Thanks as always for the great info sharing!

Mon, Sep 12, 2011 - 10:18pm (Reply to #13)
GregGH
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Ok - WTF ...

Compare 100% Silver (SBT.UN) and 100% Gold (GTU) --the sister companies of CEF - Central Fund -- WTF ... so I bought more CEF today ... time wil tell ....

this spreadsheet link is here >>>> https://docs.google.com/spreadsheet/ccc?authkey=CPmaiOsH&key=0AsAy8x4Mq0...

for live links ....thanks to whomever did this ... OMG

Thu, Sep 15, 2011 - 11:54am (Reply to #14)
bullwhip29
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@ GregGH

It looked like some people came to their senses yesterday as CEF group of co's actually rallied while others posted losses. Although down today, these same co's are down less than other phys Au/Ag funds (in addition to the GLD and SLV)

Wed, Sep 21, 2011 - 6:02pm
inverse
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Through the turmoil of the

Through the turmoil of the last few days, CEF.A has been basically flat, making the premium go from -1% to 4%. Is this just the premium finally getting back to normal, or is there some divergence between the paper and physical going on?

Fri, Sep 23, 2011 - 8:49am (Reply to #16)
Rebel INS
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CEF has been a head scratcher

CEF has been a head scratcher for me, too. I made the decision many months ago to invest in CEF as opposed to any Sprott funds for three reasons: 1) CEF was trading at below NAV while Sprott was and continues to trade well above NAV 2) CEF has more bullion than Sprott and I appreciate how CEF gives equal exposure to gold and silver 3) Sprott's convertability feature to me amounts to a marketing gimmick; mentally comforting but unrealistic for most to ever exercise.

Eric Sprott is very vocal in the goldbug community and I think that his funds benefit heavily from his name recognition and brand of guerilla style marketing.

Harvey Organ has also been taking about the banks "raiding" CEF these last few weeks while leaving Sprott alone. I don't understand what he means by this...would anyone care to explain? Are there any other reasons why Sprott seems to be more stable than CEF these last few weeks?

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