Gyroscopic Investing

market timer wrote:

Libertarian666 wrote:

Reub wrote: I just sold my remaining shares of GTU and bought GLD instead,  locking in a loss. So now is probably the perfect time to buy.

If I had any spare cash to buy gold, I would definitely be buying GTU. Why not get a bargain?

Aren't you like 75% gold and gold miners? How are you holding up during this selloff?

Ad Orientem wrote: ...GTU is a closed ended fund. This means it DOES NOT TRACK the price of gold.... I have to admit that a near 10% discount is damned tempting, especially if you can afford to hang until gold reverses course.

buddtholomew wrote: The question is how is KShartle doing?

Ad Orientem wrote: At the risk of beating a dead horse, GTU is a closed ended fund. This means it DOES NOT TRACK the price of gold. It can, and regularly does trade at either a discount or premium relative to the price of gold. This makes it a poor choice for the gold component in a PP. However it can be a very good choice for speculating in Gold. I have to admit that a near 10% discount is damned tempting, especially if you can afford to hang until gold reverses course.

Libertarian666 wrote: My understanding (which I need to confirm when I get the chance to talk to them) is that there is a way to cash out if the discount exceeds a certain percentage (I believe around 10%) for a certain length of time. So now that the discount is close to the limit set by that mechanism, the only extra volatility should be on the upside.

rickb wrote:

Libertarian666 wrote: My understanding (which I need to confirm when I get the chance to talk to them) is that there is a way to cash out if the discount exceeds a certain percentage (I believe around 10%) for a certain length of time. So now that the discount is close to the limit set by that mechanism, the only extra volatility should be on the upside.

GTU's prospectus includes a "redemption" section that says you can redeem your "units" (shares) at any time - but redeeming basically means selling your units to the fund (at a less than market price) so you'd do better selling the shares on the market.  If enough shareholders redeemed their units the fund would presumably have to sell some gold, but (at the current discount) I think the net effect would be the remaining units would correspond to slightly more gold per unit.  All closed end funds have an ultimate "hammer" option, which is to dissolve the fund by selling the assets and distributing the proceeds to the shareholders.

You may be thinking of PHYS, which does have a redeem-your-shares-for-gold option.  This is limited to amounts of one or more London Good Delivery bars, i.e. 400 oz bars.

Libertarian666 wrote: No, I'm referring to GTU. I don't understand the redemption option mentioned in their prospectus. I wrote to them to ask how it would actually work and they called me back but unfortunately I was on a critical phone call and couldn't answer them at that time. I'll contact them again Monday or Tuesday when I'm at home and have the time to spare and a phone that doesn't use minutes when I'm on hold.