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Investors Willing To Pay 31% Premium To NAV For Sprott's Physical Gold ETF In Strike Over Global Fiat Devaluation Insanity
Over the past month, gold has quietly become the only true flight to safety. Forget the dollar: the dollar is "safe" just as long as Bernanke does not decide to pull a Sunday night comparable to what the ECB did last night and strangle the greenback with one press release: frankly it is just not worth the imminent currency debasement risk, especially with the inversion in the EURUSD as the trading day has proceeded. But don't take our word for it: even with today's last bail out which is supposed to scare all shorts into covering, and unload all risk-free trades, Gold is still at $1,200. And for a far more material indication of what the market thinks of not just gold, but of representations of gold holdings by ETF's with "imaginary" unaudited stashes all over the world, take a look at the Sprott PHYS physical gold ETF, and specifically the premium over its NAV. Today it hit an all time record of 31%. The NAV differential has steadily crept higher since the launch of PHYS. Investors are willing to pay 30% more than the real value of holdings just for the knowledge that the gold backing their "assets" actually exists.
h/t Adam
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got gold bitchez?
Now that the Eurozone has to plug in the printing presses, heretofore anathema to the union and especially the Germans, gold will head higher. Expect $1300 in the near term, with higher levels as the emergency package gets used by fiscally defunct Euro periphery members.
What is Sprott's actual physical holdings?
X-large Magnum.
They hold 400 oz LBMA (London Bullion Market Association) Good Delivery bars. They store their bars at the Royal Canadian Mint (not in a questionable LBMA Bullion Bank vault -- like ScotiaMocatta -- where there was some investor concern expressed recently whether all the gold that is suppose to be there is actually there).
With Sprott's fund, if you want, you can cash out for physical gold (minumum size is the 400 oz bar -- the smallest size bar they deal with).
Eric Sprott was interviewed recently on King World News -- www.kingworldnews.com
Listen to the podcast for more info. I've listened to him several times. I trust him. Over 35 years financing/investing in natural resource companies, mostly mining. A billionaire. Has most of his personal wealth invested in his own funds.
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Bartiromo interviewed him several weeks back. He was at the NYSE to celebrate the listing of PHYS on the exchange.
The clip: http://www.thezigreport.com/2010/04/17/eric-sprott-on-cnbc/
The problem with ownership in PHYS is that you still have risk as you would own this ETF thru a brokerage account that may go bust in case of a financial system meltdown. So, where will that leave you?
I've thought about this a lot as PHYS is my single biggest holding. Can you request physical delivery of stock certificates from your broker? I'm guessing you can.
getting harder and harder to get actual stock certificates ,, act of congress but it can be done on some stocks lol
Suspicion toward a currency, once awakend, develops insomnia. - James Dines.
Pro Aurum.de have sold out of almost all weights of physical gold. Almost nothing left in stock today. Never seen that happen before.
I've heard many gold coin dealers in Europe saw massive demand in the last couple of days. Two shops send out word that demand has never been higher, not even during the fall of 2008.
This is not a good thing. This is simply investors not doing their homework...again.
Buy coins fools!
I quit my job. No money to lose, no coins needed.
Just rippin' the volatility out the market. Survival baby!
Shoes how dumb and uninformed those investors are, nothing else.
I prefer sneakers
+ 10
Careful there or I will be tempted to make sneakers on the Zazzle ZH Fundraiser site with gold coins all over them...I kinda got silly yesterday in case GG has a dog:
The Gold Bitches Dog Shirt:
http://www.zazzle.com/gold_bitches_for_pooch_dog_shirt-155827089113840728
Me things Sprott is making a mint off this thing. He was went in heavy around $250 spot. My money's on the idea that he's taking a little profit by sharing his physical with phys.to buyers AND charging them a custody fee.
No Loaning, Leasing, Rental, Swaps, Nada, Zilch, Zero, per the Prospecti. And trustee can inspect at any time thier little heart desires, per Prospecti. And Royal Canadian Mint bears responsibility for loss, theft, etc, as long as such action is claimed thereupon by trustee within several business days, per Prospecti.
No stems, no seed, that you don't need....
I would trust Sprott, I just do not trust the MARRIAGE between the US/CN Gv't.
The SHTF,this bitch will get raided, and/or shut down.
sure he developed the fund . capitalized it with a few hundred million . He is doing it for a profit ,
hand it to him.. for the average person though go down to the coin shop.. plunk down some cash take delivery of gold and silver ;
even a few coins of silver a week can help.. a gold coin a month , soon a person will have enough to last a year. with some stored food and water ,,
proceed to take precautions . now ...
chew gum . walk all at the same time
marker down 500 fat fingers
market up 500 blessed fingers
Down markets will not be tolerated in a fiat plumped...er....pumped.....er no, I had it right the first time, in a fiat plumped world.
plumped–adjective
1. well filled out or rounded in form; somewhat fleshy or fat.As gold prices consolidate, won't take much to touch off a rally.....US QE2 and STIM2.
SGOL is an interesting play. Read their prospectus. There, gold is held in allocated accounts, assayed twice a year. Far cry from the paper ponzi funds out there. I have had a large position of long SGOL/short GLD that is net neutral to the price fluctuations of gold in the markets. I have no exposure, up or down, until and unless GLD implodes spectacularly. It's a wild idea, but I don't lose sleep at night because of it. Why the hell not?
You and I must think alike. I considered the same trade. Don't have it on but may pull the trigger if I smell the end is nigh for the unsecured obligation that is GLD. Low risk, high-reward.
Folks need to know the Custodian for SGOL is JP Morgan/Chase -- same guys that are being investigated by the CFTC and DOJ for manipulation (massive shorting) of the paper silver market. This fund may be legit -- it may not. Personally, I see nothing but Red Flags when the mixture involves JPM and precious metals.
Fact Sheet: http://www.etfsecurities.com/us/document/downloads/ETFS_Fact_Sheet_Physical_Gold_us.pdf
buy coins
Yes, buy the coins. Don't fool around with anything else.
Assuming of course you have a good place to hide them.
4" PVC in 4' sections with cap on one end M/F cap on other end. double seal with caulk at joins, plant, add about 10-13 spoofspots. Sleep well and happy.
throw a couple in the underwear bin lol
double entry, sorry
“Gold Is Money, and Nothing Else.“
- JP Morgan, testifying under oath to Congress before the Pujo Commission, 1913
"Banking was conceived in iniquity and born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take away that power, and all the great fortunes like mine will disappear — as they ought to in order to make this a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, then let them continue to create deposits.”
Sir Josiah Stamp (1880-1941), one time governor of the Bank of England, in his Commencement Address at the University of Texas in 1927. Reportedly he was the second wealthiest individual in Britain.
Mobilis In Mobili -Nemo
C'mon TD,
You know the premium on the PHYS ETF is because of the tax benefit more than anything else and probably the stability of the Canadian financial system.
Any gains realized on the sale of units by an investor may be taxable at long-term capital gains rates (i.e., 15%), “compared to a long-term capital gains tax rate of 28% applicable to the disposition of physical gold bullion and other “collectibles” held for more than one year.” Under current U.S. law, the gains recognized from the sale of “collectibles” (a category into which gold ETFs fall for tax purposes) held for more than one year are taxed at a maximum rate of 28%, rather than the 15% rate applicable to most other long-term capital gains
Sawyer
Well that sucks for domestic (Canadian) holders of PHYS.
So, a foreign PM ETF doesn't qualify as a collectible if it's managed over the border?
I have suspected that the gold price - as in the futures prices - is actually driven by GLD since it is so huge. So the so called gold price on the futures markets is actually the GLD price ( ie. price of paper gold). Interesting the the actual metal trades at such a premium. Or maybe more accurate to say that the paper gold trades at a discount to the actual stuff.
I bought some PHYS for under 10 back in late March in my self-directed 401K. It was far from the dumbest thing I've done as an investor and not exactly uninformed.
I would prefer to buy coins, but AFAIK you can't do that with a 401K. Where else am I supposed to put my 401K money? GLD? A broker's money market fund? AAPL?
So I figure one of two things is true. (1) this is a bubble and PHYS will get whacked down to where I bought it at or below, or (2) PHYS's current price represents something close to the "real" price of gold, after accounting for central and investment bank shenanigans. Or somewhere in between.
What to do? What to do?
you can take a loan of half the amount with no penalties.. take that out and buy physical. dick around with the other half
Hm... that's an intersesting idea. I've been thinking of how to preserve my 401k capital. I have it in a bond fund right now, but maybe taking a loan and buying GLD with it? Or would you recommend physical gold? But then I'd have to rent a safe deposit box or something to store it.
1) Buy a safe
2) Buy physical
3) Insert in safe
4) Repeat steps 2-3
OK, I get the picture. But are you then talking about a complete breakdown of the marketplace (in addition to collapse of fiat value)? If that's the case, wouldn't I be better off stocking up on non-perishable food, guns and bullets? After all, if the marketplace breaks down, how am I going to spend gold and who's going to want it?
about ten thousand folks who deal in gold .
this constant what will i do with gold is getting to be a farce remark
gold is money. it will buy land it will buy fuel it will buy people to work.
the level of understanding is three quarts low
OK, I get the picture. But are you then talking about a complete breakdown of the marketplace (in addition to collapse of fiat value)? If that's the case, wouldn't I be better off stocking up on non-perishable food, guns and bullets? After all, if the marketplace breaks down, how am I going to spend gold and who's going to want it?
Anyone leaving funds in a 401k, IMHO Now, has not thought this deal thru.
If your 59.5, no 10% penalty, roll over to a Trad IRA(at the bank 2 blks from home).You actually MIGHT have a shot at removing, or rolling into a Gold IRA, before the shoe dropped.
I know not the greatest idea,but beats the shit out of waiting for 2-3 weeks from your plan holder.
If this shitholship stays together,LOL, the Gov has already said they are THINKING about using these as RETIREMENT FUNDS for YOU..........( funny, you already thought that didn't ya?).
They( the Lying SOB's) , say it would be a voluntary plan.........SURE it willl be.
Once they do that, your screwed.
We're already screwed on SS/Medicare(they call those an Entitlement), which is humorous, since that means basically a GIFT.....
Since WE pay/paid for it( a fat little sum over 20-35yrs, I do not consider it a GIFT), I would not give them the chance for a SECOND reach around..and you KNOW they will do it.
At a 31 percent premium , might as well cash out the 401k's, take the hit and take possession
If the government confiscates my 401K, do they wipe out the loan? Or do they force me to pay it back?
And how do I secure the coins? It is one thing to lose the coins when you own them free and clear, quite another to be up to your eyeballs in debt.
IMO, what you're suggesting is riskier than leaving the money where it is. My loss is currently limited to 100% of my 401K. By taking out the loan, my loss exposure goes to 150% of my 401K.
no bubble ,, sell ira ,, buy gold for the long run take the penalty in my very humble opinion
C'mon TD,
You know the premium on the PHYS ETF is because of the tax benefit more than anything else and probably the stability of the Canadian financial system.
Any gains realized on the sale of units by an investor may be taxable at long-term capital gains rates (i.e., 15%), “compared to a long-term capital gains tax rate of 28% applicable to the disposition of physical gold bullion and other “collectibles” held for more than one year.” Under current U.S. law, the gains recognized from the sale of “collectibles” (a category into which gold ETFs fall for tax purposes) held for more than one year are taxed at a maximum rate of 28%, rather than the 15% rate applicable to most other long-term capital gains
Sawyer
Below is the above-cited article rapping PHYS. Comments?
By Dave Nadig | March 02, 2010 Related ETFs: GLD
In the words of Star Wars' Admiral Ackbar: “It's a trap!"
I guess you know your town is on the map when the carnies show up and start taking the rubes.
Last week, the “Sprott Physical Gold Trust” started trading on the New York Stock Exchange under the ticker PHYS. Almost immediately, the media starting singing its glory: “New Gold ETF Prospectus Reveals Exciting Feature,” wrote Seeking Alpha contributor ETFdb. Invest with an Edge had similarly glowing coverage.
Unfortunately, PHYS is not an ETF. And its “exciting feature?” Well, that turns out to be a trap.
Not An ETF
I define an ETF as an open-ended mutual fund that trades on an exchange and uses a creation and redemption mechanism to keep its share price in line with its NAV.
PHYS trades on an exchange, but the comparisons stop there.
The company doesn't try to hide this. The prospectus states:
"The Trust is a closed-end mutual fund trust established under the laws of the Province of Ontario"As a closed-end fund, PHYS comes with all kinds of warts that do not apply to ETFs. For starters, PHYS was sold at a 5 percent commission. That is, the price offered to initial investors in the fund was $10 a share, but the NAV took an immediate haircut to $9.50, because 50 cents went into the hands of the good folks at RBC Dominion Securities, Morgan Stanley Canada, BMO Nesbitt Burns and other underwriters. ETFs never come with initial underwriting commissions.
That might not matter to investors who purchase it on the open market, but there are other warts that do.
For instance, as with all closed-end funds, there is no way for PHYS to issue new shares, which means there is effectively no way for the security to actually track the price of gold. Sure, it might, but if the shares trade at a premium, it's impossible for an arbitrageur to go buy gold, turn it into shares, sell them on the open market and drive the market price back to NAV.
PHYS does have a redemption feature, but it's severely crippled. The PHYS redemption window is only open once a month, and it comes with a lag. Investors who want to redeem shares of the fund can submit a request to the company on the 15th of the month. If the redemption request is large enough (bigger than a single gold bar), the redemption will be processed at least in part for physical gold at NAV at the end of the month (13-15 days later). If you're redeeming lots smaller than a physical gold bar or just want cash, you get dinged for at least 5 percent off of the value of the fund.
That's not exactly a liquidity option. Let's just say that market makers aren't lining up to ride this “lightning-quick” 15-day flawed redemption process to ensure that the fund stays close to fair value.
The Big Tax Trap
But those flaws pale in comparison with the “exciting feature” that ETFdb notes in its article: the tax treatment.
According to the fund's prospectus, “Any gains realized on the sale of units by an investor … may be taxable as long-term capital gains (at a maximum rate of 15% under current law).”
It sounds like the Holy Grail. One of the vexing problems of funds like the SPDR Gold Trust (NYSEArca: GLD) is that, no matter how long you own it, you will owe 28 percent taxes on gains because the IRS considers all gold investments to be collectibles. PHYS claims to have found a way around this problem, creating a gold bullion fund that qualifies for true long-term tax treatment. Brilliant!
Except it's not.
The IRS isn't stupid. It's going to get its money somewhere. And in this case, it looks like it's reaching into the pockets of PHYS' most loyal, buy-and-hold investors to grab that 28 percent for the U.S. Treasury.
Understanding why gets into the weeds of the prospectus, but it's important to do, because the implications are huge. Here's the relevant paragraph:
"If any holder redeems his, her or its units for physical gold bullion (regardless of whether the holder requesting redemption is a U.S. Holder or an Electing Holder), the Trust will be treated as if it sold physical gold bullion for its fair market value in order to redeem the holder's units. As a result, any Electing Holder will be required to currently include in income his, her or its pro rata share of the Trust's gain from such deemed disposition (taxable to a Non-Corporate Electing Holder at a maximum rate of 28% under current law if the Trust has held the physical gold bullion for more than one year) even though the deemed disposition by the Trust is not attributable to any action on the Electing Holder's part."Let me parse that for you.
You, Mr. Long-Term Buy-and-Hold, purchase shares of PHYS and stuff them deep in your portfolio, confident that you'll only pay long-term gains of 15 percent when you eventually decide to sell. Meanwhile, a hedge fund buys shares of PHYS, rides them while gold is rising, and then redeems them back to the fund company.
To meet this redemption, the trust either sells a pile of gold to pay cash or redeems out physical gold bars. Either way, the trust will book that sale with the IRS based on the current price as gold, and will be taxed at the 28 percent collectible rate on any gains. But funds never actually pay taxes: They pass them along to shareholders. So that 28 percent gain accrued by the hedge fund activity? That's going to be paid by you, even though you never sold a share.
I guess I'll have to agree with the headlines—that's certainly an exciting feature. I suppose getting a root canal without the gas is “exciting” too.
ETFs treat all investors fairly. PHYS not so much.
physical treat you as fairly as any thing ,
whats this all investors should be treated fairly.
just buy the dang coin. it will treat you well
Physical and paper are decoupling. Told. You. So.
GG,
In my minds eye, this is how I see you. You are obviously VERY happy. :>)
LOL!
GG I made this just for you at the ZH Fundraiser--if you have a mutt!
http://www.zazzle.com/gold_bitches_for_pooch_dog_shirt-155827089113840728
LOL! Here is a pic of me guarding my gold CD
I have photoshopped out the gold to protect the innocent! Removed all the chickens too...
http://www.importcostumes.com/i/360x360/IC34447.jpg
G_G,
Was just a matter of time..........another sign, of how screwed we are.
For a long time, people have had to choose between guns and ammo and gold. Well, now no more! When we have one epic package, gold guns! The best of both worlds.
http://www.ebaumsworld.com/pictures/view/27344/
My question: How does one expect delivery during a meltdown?
My answer: Nervously!
get your gold now .why wait/
+361.63 (3.48%) Real-time: 1:24PM EDT 12,000 here we come!!!! Green Shoots Bitches!!!! The milking of Europe may very well help us, depending on how hard we can get our new slaves to work? Gold? Gold is down today? are ya'll buying the dips?
We've already bought the dips. Then we sent them to DC.
LOL
According to the fund's prospectus, “Any gains realized on the sale of units by an investor … may be taxable as long-term capital gains (at a maximum rate of 15% under current law).”
It sounds like the Holy Grail. One of the vexing problems of funds like the SPDR Gold Trust (NYSEArca: GLD) is that, no matter how long you own it, you will owe 28 percent taxes on gains because the IRS considers all gold investments to be collectibles. PHYS claims to have found a way around this problem, creating a gold bullion fund that qualifies for true long-term tax treatment. Brilliant!
Except it's not.
http://www.indexuniverse.com/sections/blog/7345-phys-not-a-gold-etf-and-a-bad-deal.html
Bullion fund CEF/Central Fund of Canada Limited has a tax structure that allows favorable long term
cap gains and typically trades at a double-digit premium to spot gold or bullion etfs like GLD probably at least in part because of the preferable tax treatment.
Ummm...the best way still is to just buy the physical yourself using cash and hide it from the prying eyes of the thieves we call "the government" today.
I'm finding the hardest part of this project is getting the paper $FRN in the first place -- the banks don't have it --
maybe I need to start an all-cash business?
The Banks order cash once, twice a week.......you want 50-75k out?.
Tell them in advance, they will order it in for you.
OMG is that Andy? OMG is THAT Andy? OMG IS THAT ANDY?
Hi Andy. :>)
see
http://www.bloomberg.com/apps/quote?ticker=ZGLD%3ASW
http://www.zkb.ch/
*** however, neither ZKB or Julius Baer hold stamped bars & self-audit.
CEF stamped bars? Calling today.
Fellas:
Thoughts on Central Fund of Canada (CEF?) 90% of its assets are in gold and silver at all times, and all bullion is "unencumbered, allocated, segregated, and insured"
http://www.centralfund.com/
Unreal, I was looking at it last week, and the premium was 12%....and I said screw that.
Now it's 31%??.
There are other places that do the same for a hell of a lot less.or did.
Investigate this one http://www.gold-trust.com/asset_value.htm
Just to confirm what a previous poster has said - there is currently huge interest in gold - the local dealer has sold out of bullion coins and there are people buying as many bars as they can get hold of - and not worrying about the current prices. When the ultra rich are doing that (when they might not have been so "predatory" before), you know something's up.
Central Fund of Canada just announced an overnight offering at 5% over NAV . It closed today at 11% over NAV so a 6% haircut on the offering.
Why would someone not buy the Central Fund offering tonight at the 5% premium instead of holding PHYS at 31% premium. Sounds like the perfect pair trade. Short PHYS and buy CEF offering.
This strikes me as a form of backwardation
:)
me too
well the gold etfs buy the gold take delivery
start your own mini ETF go down to coin shop. buy
the mark up 5% so for a 1220 gold you pay 1280,
call it the dumpsters guy fund .
own it all,,, lose the papers in fire,
when gold creeps in to the $4000's supplement your social security , one coin at a time .
this who will buy? needs to be put to rest .. look around line up the future ,, chew gum, walk at the same time ..
60 percent of business will still be running .. look at iraq, the whole place a time bomb yet folks buy cars , fuel, etc.
those with a gold coin go to the person with a huge stash in his hand , they get the gold your get what ever the going rate is. they will be there
dont eat the paper lol buy some food . buy some shoes , buy a toothbrush
Interesting DOW chart and will upload a new EURO chart shortly:
http://www.zerohedge.com/forum/latest-market-outlook-0
http://stockmarket618.wordpress.com
sure, you buy PSLV at a premium, but you also sell it at a premium.. so, (depending on the timing of the buy/sell) it's basically a wash.
PSLV is also a statement about NOT buying paper derivatives. end the SLV scam, buy PSLV - it just feels better