Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

[dragoncar]

What does that mean for us?  Higher expenses?  Different taxation?

[jason]

I've owned GTU for years and I haven't been interested in the Sprott offer until now.  I bought GTU for four reasons: 1. It's in Canada, giving me at least some level of international diversification (I live in the US). 2. It's a closed end fund, which has lower tax rate than gold ETFs.  3.  In the very unlikely event gold in the US is confiscated like it was an 1933, it may not be affected and 4. I had the perception that it was less likely to be leveraged (have fractional reserves) than an ETF like GLD or IAU. 
I chose GTU over Sprott because Sprott's redemption feature can cause the fund to realize capital gains, triggering capital gains taxes that are to be absorbed by the shareholders.  GTU dos not have this issue.
Now GTU is saying they are changing over to become an ETF??  That makes little sense to me.  Anyone who was looking for an ETF would have bought IAU, GLD, etc., not GTU, right?  Am I going to lose all benefits that made me choose to buy GTU over IAU in the first place?
If so, I think I will vote to accept the Sprott offer.
But then there is a chance that both the Sprott offer and the ETF switch over could both get voted down. 
So, I am conflicted - should I vote to accept the Sprott offer, or should I just do nothing?  What I really want is to just keep GTU, with no changes.
It seems like there is a chess match going on here that I don't really understand.
Thanks!

[Libertarian666]

I just saw a notice from Fidelity that said that GTU's trustees have been replaced, effective immediately, by a board selected by a Sprott entity. Here's the relevant part of the announcement:

'GTU (US$)) announced today the removal of Brian E. Felske, Glenn C. Fox, Bruce D. Heagle, Ian M.T. McAvity, Michael A. Parente and Jason Schwandt as trustees of GoldTrust and the appointment of Marc Faber, James R. Fox, Sharon Ranson, John Wilson and Rosemary Zigrossi (the "Appointed Trustees") as trustees of GoldTrust. The removal and appointment of trustees was made pursuant to a written resolution of Sprott Asset Management Gold Bid LP, as the holder of powers of attorney from unitholders owning approximately 55.11% of the outstanding units of GoldTrust. The Appointed Trustees, in addition to J.C. Stefan Spicer, who was nominated as a trustee by Central Gold Managers Inc., the administrator of GoldTrust, shall remain trustees of GoldTrust until the next annual meeting of GoldTrust or until such trustees cease to hold office prior thereto.'

I find it very hard to believe that the unitholders realized that they were giving Sprott powers of attorney that authorized that. I also find it hard to believe that the "former trustees" are going to take this lying down, especially since I'm pretty sure that they got a court to tell Sprott they couldn't do that, as it violates Canadian security laws.

It's also not mentioned on the GTU website. I wish I had seen this earlier today so I could contact GTU and ask them what is going on.

[dragoncar]

Interesting that GTU says "The ETF Conversion is not expected to have any material adverse tax effect on GoldTrust or its unitholders and will preserve GoldTrust’s tax efficient structure"

Since I did buy some at a premium, however, I'd like the opportunity to liquidate at a premium in the future

[dragoncar]

So how are you guys votings?

[LazyInvestor]

This is getting annoying. Not sure what to do...

[dragoncar]

I don't think it matters any more. Sprott now controls >50% of the voting shares.

I thought some votes needed more than a simple majority

[Libertarian666]

I don't think it matters any more. Sprott now controls >50% of the voting shares.

I thought some votes needed more than a simple majority

They decided to replace the trustees to make an end-run around the rules.

Whether they will get away with this is another matter.

[dragoncar]

I don't think it matters any more. Sprott now controls >50% of the voting shares.

I thought some votes needed more than a simple majority

They decided to replace the trustees to make an end-run around the rules.

Whether they will get away with this is another matter.

There's still the vote for ETF conversion though

[l82start]

I thought some votes needed more than a simple majority

They decided to replace the trustees to make an end-run around the rules.

Whether they will get away with this is another matter.

There's still the vote for ETF conversion though

so how are people planing to vote on the etf question?

[Reub]

Would the etf not require actual physical gold backing and would GTU then lose its tax advantages?

[steve]

I held GTU for years and was quite happy until Sprott got into the picture. Discounts and premiums never bothered me because I follow the PP and it only benefited me. Not long ago I sold all my GTU for tax loss harvest purposes and picked up more physical bullion to add to my core gold and switched the rest to IAU.  Not long after I had the opportunity to do another tax loss harvest with IAU and now have GLD.  Other options I am looking into are Merk gold trust ticker OUNZ.  I like to have some online gold for easy re balance and tax loss harvest purposes  I have also found a reasonable cost safe deposit box insurance that I am looking into which helps minimize risks if a large amount is held.    https://safedepositboxinsurance.com/  If anyone has information about safe deposit box insurance I would love to hear from you.

[rickb]

If anyone has information about safe deposit box insurance I would love to hear from you.

See http://gyroscopicinvesting.com/forum/go ... your-gold/

[BearBones]

I held GTU for years and was quite happy until Sprott got into the picture. Discounts and premiums never bothered me because I follow the PP and it only benefited me. Not long ago I sold all my GTU for tax loss harvest purposes...

Agree. Down on GTU now that it looks like it may be converted either to an ETF or to PHYS. Thinking of just selling for tax loss harvest myself. Current "discount" -1.3. Better to sell now or wait for possible conversation?

[Pointedstick]

I sold it all and replaced it with Schwab's commission-free SGOL. Too much drama for my taste.

[Reub]

I'm keeping it because I love getting mail!

[dualstow]

I'm keeping it because I love getting mail!

I must have thrown out 7 copies of the latest mailings. Slice open the plastic, recycle the paper...
As soon as it hits breakeven, I'm selling it. I hope I don't have to wait 20 years.

[Reub]

How can you tell when it's at breakeven?

[dragoncar]

How can you tell when it's at breakeven?

I think he means relative to his cost basis, although I'm not sure why to wait that long.  I don't love locking in the loss based on premiums I paid earlier, but don't mind tax loss harvesting now... I'm not sure any alternative is better or less risk of "drama"-- that's why the orthodox pp suggests physical no?

PS, did you go with sgol only based on commissions or were there other attractive qualities?

[Reub]

I've harvested my tax losses earlier in the year. Are there other valid reasons to sell GTU?

[BearBones]

I've harvested my tax losses earlier in the year. Are there other valid reasons to sell GTU?

Seems that it will either be converted to PHYS or an ETF, the latter having less favorable tax consequences. Think I will sell today and buy PHYS, realizing loss. Can always buy back once the drama ends (if beyond 30 day wash sale rule). Anyone disagree?

[steve]

I sold my GTU to for a tax loss harvest, I was happy with GTU before Sprott got into the picture.  If I want online gold that I can convert to physical I will buy OUNZ
http://www.merkgold.com/overview.html      or if I want to hold a gold ETF it will be either GLD or IAU.  IAU has lower expense but for tax loss harvesting I can see selling one and buying the other. Gold ETF are treated as collectibles so although they don't have the long term tax advantages that GTU had, they do not have wash sale rules as far as I know. So you could sell one gold etf and buy another. Although you should be able to buy the exact same one, brokerage accounts would treat it as a wash sale if it has the same CUSIP number

[dualstow]

How can you tell when it's at breakeven?

I think he means relative to his cost basis, although I'm not sure why to wait that long.  I don't love locking in the loss based on premiums I paid earlier, but don't mind tax loss harvesting now...

Yes, d-car, relative to my cost basis.
I am only in the 15% bracket.
I pay zero taxes on stock dividends and very little tax in general. No chance to tax loss harvest in my household.

[Phalanx]

I sold it all and replaced it with Schwab's commission-free SGOL. Too much drama for my taste.

Yep, just did the exact same.

[stpeter]

I sold it all and replaced it with Schwab's commission-free SGOL. Too much drama for my taste.

Yep, just did the exact same.

Same here. I'm sad to see GTU go, it was the best option before Sprott got involved...