Do you think this is the best way to get exposure to both gold and silver? I own G.TO now and was looking to pick up PAA.TO, but this also looks interesting
Zylon, I just reread your little blurb and the end of your last post and I think that already answered my question lol, sorry
The premium has nearly been wrung out of CEF
I'll be looking to buy within the next week or two if price continues to decline.
I've held CEF.A since 2007. I think it's a great way to hold precious metals. There's some information in this report:
Thinking off the top of my head, there's 3 main ways this differs from actually owning gold/silver:
1. CEF owns the metals through a bank, and you're a shareholder in the fund
2. The share price fluctuates around the NAV, so beware the premium/discount
3. The fund incurs expenses so some of your metal "leaks away" while you hold CEF
That report I linked goes into depth on #3. Basically you're losing 0.6% to 0.8% per year of metal content in your shares. If you think of it as an MER, that's pretty low. In fact the analysis was done a couple years ago. In the last couple years the "MER" has been even lower than that. Not a bad deal, I think.
Here's a tip regarding the premium/discount to NAV. That figure (as they post on the web site) is slightly misleading as the share price closes at 4 pm eastern, whereas the metal prices are taken from the London fix which is a totally different time. If looking at the TSX shares, you also have to consider the USD/CAD rate, and theirs is taken at noon. So you can see these times do not perfectly align... that means the premium or discount is a bit artificial, though it's generally the right ballpark.
The only proper way to calculate the premium to NAV is to do it in real-time, during the trading day. This is pretty easy to do with a basic spreadsheet (just mimic what they've done on their NAV page).
Before trading CEF.A, I always pull up my own spreadsheet based on Central Fund's NAV page, and update it with the real-time information as the shares trade. Then I really know what the premium/discount is.