Sprott to acquire CEF

Discussion of the Gold portion of the Permanent Portfolio

Moderator: Global Moderator

FarmerD
Executive Member
Executive Member
Posts: 458
Joined: Wed Jul 06, 2011 10:37 pm

Sprott to acquire CEF

Post by FarmerD » Wed Mar 08, 2017 12:43 pm

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/
User avatar
technovelist
Executive Member
Executive Member
Posts: 7161
Joined: Wed Sep 15, 2010 11:20 pm

Re: Sprott to acquire CEF

Post by technovelist » Wed Mar 08, 2017 4:16 pm

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...
User avatar
l82start
Global Moderator
Global Moderator
Posts: 2686
Joined: Sun Apr 25, 2010 9:51 pm

Re: Sprott to acquire CEF

Post by l82start » Wed Mar 08, 2017 4:28 pm

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 :)
Government 2020 - a BANANA REPUBLIC - if you can keep it

Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
User avatar
technovelist
Executive Member
Executive Member
Posts: 7161
Joined: Wed Sep 15, 2010 11:20 pm

Re: Sprott to acquire CEF

Post by technovelist » Wed Mar 08, 2017 5:03 pm

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?
boglerdude
Executive Member
Executive Member
Posts: 631
Joined: Wed Aug 10, 2016 1:40 am
Contact:

Re: Sprott to acquire CEF

Post by boglerdude » Wed Mar 08, 2017 10:21 pm

technovelist wrote:I don't believe anything that Sprott says.
Why & whats the best alternative
User avatar
technovelist
Executive Member
Executive Member
Posts: 7161
Joined: Wed Sep 15, 2010 11:20 pm

Re: Sprott to acquire CEF

Post by technovelist » Wed Mar 08, 2017 11:08 pm

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).
User avatar
dualstow
Executive Member
Executive Member
Posts: 10917
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Sprott to acquire CEF

Post by dualstow » Wed Mar 08, 2017 11:15 pm

Thanks for the heads up, FD.
I have some in my Roth. May sell it and buy something else.
Apple Security Head Charged With Offering Bribe for Gun Licenses - Bloomberg
Robin DiAngelo, author of ‘White Fragility’, paid more for speaking engagement than black counterparts. — FreeBeacon dot com
boglerdude
Executive Member
Executive Member
Posts: 631
Joined: Wed Aug 10, 2016 1:40 am
Contact:

Re: Sprott to acquire CEF

Post by boglerdude » Wed Mar 08, 2017 11:31 pm

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)?
User avatar
technovelist
Executive Member
Executive Member
Posts: 7161
Joined: Wed Sep 15, 2010 11:20 pm

Re: Sprott to acquire CEF

Post by technovelist » Thu Mar 09, 2017 12:37 am

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.
User avatar
dualstow
Executive Member
Executive Member
Posts: 10917
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Sprott to acquire CEF

Post by dualstow » Thu Mar 09, 2017 10:18 am

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"?
Apple Security Head Charged With Offering Bribe for Gun Licenses - Bloomberg
Robin DiAngelo, author of ‘White Fragility’, paid more for speaking engagement than black counterparts. — FreeBeacon dot com
User avatar
technovelist
Executive Member
Executive Member
Posts: 7161
Joined: Wed Sep 15, 2010 11:20 pm

Re: Sprott to acquire CEF

Post by technovelist » Thu Mar 09, 2017 10:39 am

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.
User avatar
dualstow
Executive Member
Executive Member
Posts: 10917
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Sprott to acquire CEF

Post by dualstow » Thu Mar 09, 2017 10:42 am

That's good info, thank you!
We should have a small library of recommended precious metal history books, like Bogleheads has for general investing.
Apple Security Head Charged With Offering Bribe for Gun Licenses - Bloomberg
Robin DiAngelo, author of ‘White Fragility’, paid more for speaking engagement than black counterparts. — FreeBeacon dot com
Post Reply