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Sprott to acquire CEF

Posted: Wed Mar 08, 2017 12:43 pm
by FarmerD
I saw today gold and silver were down today but CEF was up almost 3%. I figured something was up and apparently there is. Looks like Sprott is seeking to acquire the Central Fund of Canada much like they did to GTU recently. As of COB yesterday, CEF's price was 12.27 while it's NAV was listed as 13.40 on Morningstar. Looks like us CEF owners will be in for a nice windfall if Sprott succeeds in their takeover.

Weirdly enough, I bought some CEF yesterday because of the hefty discount. Call me Gordon Gekko.

http://www.680news.com/2017/03/08/sprot ... of-canada/

Re: Sprott to acquire CEF

Posted: Wed Mar 08, 2017 4:16 pm
by technovelist
Ok, so what are others going to do about the disappearance of CEF? Assuming this goes through, it will give me a big capital loss that I don't have any use for. I don't want to deal with Sprott because I don't like their tactics.

On the positive side, I won't have to file 8621's any more...

Re: Sprott to acquire CEF

Posted: Wed Mar 08, 2017 4:28 pm
by l82start
technovelist wrote:Ok, so what are others going to do about the disappearance of CEF? Assuming this goes through, it will give me a big capital loss that I don't have any use for. I don't want to deal with Sprott because I don't like their tactics.

On the positive side, I won't have to file 8621's any more...
are you sure? i have a paper in my tax pile from sprot that says that PHYS (what GTU became) PSLV (what CEF would likely become) and SPPP are all PFIC and QEF (passive foreign investment company) and (a qualified electing fund) i don't really understand or care since my GTU (now PHYS) is all in tax advantaged anyway, but if it was taxable i would check relevant forms on their website just to be certain...

oops i may have read that wrong if you don't need to file 8621 because you are dumping them, and not because the funds status may change then ignore :)

Re: Sprott to acquire CEF

Posted: Wed Mar 08, 2017 5:03 pm
by technovelist
l82start wrote:
technovelist wrote:Ok, so what are others going to do about the disappearance of CEF? Assuming this goes through, it will give me a big capital loss that I don't have any use for. I don't want to deal with Sprott because I don't like their tactics.

On the positive side, I won't have to file 8621's any more...
are you sure? i have a paper in my tax pile from sprot that says that PHYS (what GTU became) PSLV (what CEF would likely become) and SPPP are all PFIC and QEF (passive foreign investment company) and (a qualified electing fund) i don't really understand or care since my GTU (now PHYS) is all in tax advantaged anyway, but if it was taxable i would check relevant forms on their website just to be certain...

oops i may have read that wrong if you don't need to file 8621 because you are dumping them, and not because the funds status may change then ignore :)
I don't believe anything that Sprott says. That's part of why I'm going to get rid of the shares.

Are there any details on the exchange offer available yet?

Re: Sprott to acquire CEF

Posted: Wed Mar 08, 2017 10:21 pm
by boglerdude
technovelist wrote:I don't believe anything that Sprott says.
Why & whats the best alternative

Re: Sprott to acquire CEF

Posted: Wed Mar 08, 2017 11:08 pm
by technovelist
boglerdude wrote:
technovelist wrote:I don't believe anything that Sprott says.
Why & whats the best alternative
Because he's slimy. Look up how he overturned the governance agreement that everyone who bought GTU seemed happy with; I don't have the details handy at the moment, but I do remember my analysis of his behavior as being horrible.

What's the best alternative? Physical gold (and silver if you are crazy).

Re: Sprott to acquire CEF

Posted: Wed Mar 08, 2017 11:15 pm
by dualstow
Thanks for the heads up, FD.
I have some in my Roth. May sell it and buy something else.

Re: Sprott to acquire CEF

Posted: Wed Mar 08, 2017 11:31 pm
by boglerdude
technovelist wrote:What's the best alternative? Physical gold (and silver if you are crazy).
Do you take your coins to the dealer when it's time to rebalance? Is that a haggle-free transaction (always the day's spot)?

Re: Sprott to acquire CEF

Posted: Thu Mar 09, 2017 12:37 am
by technovelist
boglerdude wrote:
technovelist wrote:What's the best alternative? Physical gold (and silver if you are crazy).
Do you take your coins to the dealer when it's time to rebalance? Is that a haggle-free transaction (always the day's spot)?
I've never haggled with a coin dealer. They have posted prices that will always track spot very closely except in REALLY weird cases like in 2008 when I had some money to buy gold and there was NOTHING available anywhere near spot, which was at about $800. Kitco was sold out of everything but 1-ounce bars, and those had a 10% premium, when 2% or 3% would have been more normal. The next day they were sold out of those too.

Re: Sprott to acquire CEF

Posted: Thu Mar 09, 2017 10:18 am
by dualstow
technovelist wrote:...except in REALLY weird cases like in 2008 when I had some money to buy gold and there was NOTHING available anywhere near spot, which was at about $800. Kitco was sold out of everything but 1-ounce bars, and those had a 10% premium, when 2% or 3% would have been more normal.
Yikes. I wonder what the rare seller would have got, relative to spot, when it was $800.

More importantly, let's say gold hits US$2,000 an ounce and many people want to sell their coins. Of course it would be profitable overall, but do you think they would get far less premium back than if they were to sell today? Do you think there would be dealers simply announcing "We're not buying at this time"?

Re: Sprott to acquire CEF

Posted: Thu Mar 09, 2017 10:39 am
by technovelist
dualstow wrote:
technovelist wrote:...except in REALLY weird cases like in 2008 when I had some money to buy gold and there was NOTHING available anywhere near spot, which was at about $800. Kitco was sold out of everything but 1-ounce bars, and those had a 10% premium, when 2% or 3% would have been more normal.
Yikes. I wonder what the rare seller would have got, relative to spot, when it was $800.

More importantly, let's say gold hits US$2,000 an ounce and many people want to sell their coins. Of course it would be profitable overall, but do you think they would get far less premium back than if they were to sell today? Do you think there would be dealers simply announcing "We're not buying at this time"?
I believe the seller would have gotten 5% over or something like that.

If gold gets to $2000 and people want to sell, they should get at least melt - refining cost (maybe 1% for the latter?).

But when silver got to $48 in 1980, there were long lines waiting to sell at coin dealers, and some of them got significantly under spot, if I recall correctly, because the refiners were backed up for months.

On the other hand, I bought a few prooflike Morgan dollars at about spot because the dealers wanted to unload them rather than waiting for the refiners, so there are always opportunities for contrarians. I wish I had hung onto them but I sold them at a profit shortly thereafter.

Re: Sprott to acquire CEF

Posted: Thu Mar 09, 2017 10:42 am
by dualstow
That's good info, thank you!
We should have a small library of recommended precious metal history books, like Bogleheads has for general investing.