GTU is Trading Below NAV

[samuraidog]

Thanks for replies. I guess my next question is whether I should sell my 25% SGOL brokerage option in my 401k for 25% in GTU. Would there be any benefit in swapping out SGOL for GTU?

Another thing that I've always wondered about paper gold is the concept of theft. In other words, let's say that a thief swipes some (or all) of the physical gold in the vaults. Does that mean the investors' shares in that particular ETF (for example, GTU) go to zero?  How is the investor protected against theft?

Thanks again.

[Pointedstick]

Thanks for replies. I guess my next question is whether I should sell my 25% SGOL brokerage option in my 401k for 25% in GTU. Would there be any benefit in swapping out SGOL for GTU?

I did this a few months back when GTU was trading at a 5% discount. It's an even better deal now. Even if the spot price of gold doesn't recover soon, when the discount becomes a premium--the normal state of affairs for a CEF--you can sell it and buy back your SGOL for an instant boost. And with patience to wait it out until the spot price of gold rises again, you could easily sell when the premium becomes ridiculous and essentially boost your gold return by 10% or more simply by taking advantage of the fund's premium expansion and contraction.

[samuraidog]

Thanks for replies. I guess my next question is whether I should sell my 25% SGOL brokerage option in my 401k for 25% in GTU. Would there be any benefit in swapping out SGOL for GTU?

I did this a few months back when GTU was trading at a 5% discount. It's an even better deal now. Even if the spot price of gold doesn't recover soon, when the discount becomes a premium--the normal state of affairs for a CEF--you can sell it and buy back your SGOL for an instant boost. And with patience to wait it out until the spot price of gold rises again, you could easily sell when the premium becomes ridiculous and essentially boost your gold return by 10% or more simply by taking advantage of the fund's premium expansion and contraction.

Thanks. I think I'll swap out my SGOL for GTU.

Also, strange question, but what happens if GTU's vaults are cleaned out in a robbery? Are we somehow protected or does our GTU balance go to zero?

[rickb]

Also, strange question, but what happens if GTU's vaults are cleaned out in a robbery? Are we somehow protected or does our GTU balance go to zero?

GTU's gold is insured by the custodian.  From the prospectus:

Uninsured and Underinsured Losses
All of the gold bullion owned by GoldTrust is stored on an unencumbered and allocated basis in the treasury vaults of one of the largest banks in Canada in segregated safekeeping. The Bank, as Custodian, maintains insurance with regard to its business and bullion storage on such terms and conditions as it considers appropriate. There can be no assurance, however, that such insurance coverage will be extended to the assets of GoldTrust and, if so, that such coverage will be sufficient to cover losses that could be incurred by GoldTrust.
 

[samuraidog]

Also, strange question, but what happens if GTU's vaults are cleaned out in a robbery? Are we somehow protected or does our GTU balance go to zero?

GTU's gold is insured by the custodian.  From the prospectus:

Uninsured and Underinsured Losses
All of the gold bullion owned by GoldTrust is stored on an unencumbered and allocated basis in the treasury vaults of one of the largest banks in Canada in segregated safekeeping. The Bank, as Custodian, maintains insurance with regard to its business and bullion storage on such terms and conditions as it considers appropriate. There can be no assurance, however, that such insurance coverage will be extended to the assets of GoldTrust and, if so, that such coverage will be sufficient to cover losses that could be incurred by GoldTrust.

Thanks. Sounds like legal speak for "We are insured, but you may not get your money back if the gold is stolen."

[MediumTex]

Also, strange question, but what happens if GTU's vaults are cleaned out in a robbery? Are we somehow protected or does our GTU balance go to zero?

GTU's gold is insured by the custodian.  From the prospectus:

Uninsured and Underinsured Losses
All of the gold bullion owned by GoldTrust is stored on an unencumbered and allocated basis in the treasury vaults of one of the largest banks in Canada in segregated safekeeping. The Bank, as Custodian, maintains insurance with regard to its business and bullion storage on such terms and conditions as it considers appropriate. There can be no assurance, however, that such insurance coverage will be extended to the assets of GoldTrust and, if so, that such coverage will be sufficient to cover losses that could be incurred by GoldTrust.

Thanks. Sounds like legal speak for "We are insured, but you may not get your money back if the gold is stolen."

I think that there is a saying among carpenters that you should "measure twice and cut once."

If I were you I would do more reading and research before making any moves in your gold allocation.  Don't take our word on any of this stuff.  Go check it out for yourself.  There is some really good information in our PP book about the entire continuum of gold ownership from ETFs to a pile of coins buried in your backyard (I'm not suggesting that you take our word for it in the book either, but the book points to a lot of other good resources in its analysis).

I really like GTU a lot, but if you don't completely understand the premium/discount issue and what drives it, the tax issues and how to make best use of the tax planning opportunities, and the risks and benefits to using a closed-end gold fund based in Canada, then I would wait to make any moves.  The learning part is fun and will help the GTU ownership experience be more satisfying.

If possible, try to own a little physical gold as well.  There is nothing quite like holding a gold coin in your hand, especially (for me) the American Eagle coin.  In addition to it being a beautiful coin, it gives me a sense of patriotism, like no matter how many stupid things the government does, it still managed to mint this beautiful coin that will likely outlast the government itself.

[samuraidog]

GTU's gold is insured by the custodian.  From the prospectus:

Uninsured and Underinsured Losses
All of the gold bullion owned by GoldTrust is stored on an unencumbered and allocated basis in the treasury vaults of one of the largest banks in Canada in segregated safekeeping. The Bank, as Custodian, maintains insurance with regard to its business and bullion storage on such terms and conditions as it considers appropriate. There can be no assurance, however, that such insurance coverage will be extended to the assets of GoldTrust and, if so, that such coverage will be sufficient to cover losses that could be incurred by GoldTrust.

Thanks. Sounds like legal speak for "We are insured, but you may not get your money back if the gold is stolen."

I think that there is a saying among carpenters that you should "measure twice and cut once."

If I were you I would do more reading and research before making any moves in your gold allocation.  Don't take our word on any of this stuff.  Go check it out for yourself.  There is some really good information in our PP book about the entire continuum of gold ownership from ETFs to a pile of coins buried in your backyard (I'm not suggesting that you take our word for it in the book either, but the book points to a lot of other good resources in its analysis).

I really like GTU a lot, but if you don't completely understand the premium/discount issue and what drives it, the tax issues and how to make best use of the tax planning opportunities, and the risks and benefits to using a closed-end gold fund based in Canada, then I would wait to make any moves.  The learning part is fun and will help the GTU ownership experience be more satisfying.

If possible, try to own a little physical gold as well.  There is nothing quite like holding a gold coin in your hand, especially (for me) the American Eagle coin.  In addition to it being a beautiful coin, it gives me a sense of patriotism, like no matter how many stupid things the government does, it still managed to mint this beautiful coin that will likely outlast the government itself.

Thanks for your advice.

Since I would be using GTU in my 401k, I assume that the tax implications don't apply to me because it will be 20+ years before I will be able to tap into my 401k.

[AdamA]

Thanks for replies. I guess my next question is whether I should sell my 25% SGOL brokerage option in my 401k for 25% in GTU. Would there be any benefit in swapping out SGOL for GTU?

Consider splitting it between GTU, SGOL and also some coins (outside of the 401k).

The idea is to diversify, not to try to pick a risk free fund (b/c that's impossible).

I like your simple 4 ETF setup.  You could start there and then as you get more comfortable add some of these other ideas. 

[Christina K.]

I only hold paper gold: gld, sgol, and gtu.
Can you tell me the best way to buy eagles, perhaps both locally and otherwise?  The book recommends coins over bars so that's why I'm thinking eagles.
In other words, how do I choose a reputable dealer and up to what premium should I expect to pay?

All opinions are appreciated.

[MediumTex]

I only hold paper gold: gld, sgol, and gtu.
Can you tell me the best way to buy eagles, perhaps both locally and otherwise?  The book recommends coins over bars so that's why I'm thinking eagles.
In other words, how do I choose a reputable dealer and up to what premium should I expect to pay?

All opinions are appreciated.

I have used AJPM and been pleased.  They are in Portland and ship to wherever you are.

[l82start]

i haven't followed it closely or for any long period, but when i bought a few shares i do remember seeing it move fast when it moved back up....

[MediumTex]

Btw, the google spreadsheet referenced earlier does not seem to pull numbers for GTU anymore.

It was working earlier today.

It does that sometimes, though.

[Ad Orientem]

According to GTU's website, as of close today GTU is only trading at a 0.2% discount. Did that entire wide berth evaporate in a day or was someone misreading numbers yesterday?

Gold bounced over $20 in the first 90 seconds or so after I posted an article arguing that the gold crash was not over.

[6 Iron]

It seems that the discount pricing for GTU continues; 2.9% at close of market today. While it is less than the 7% discount I last bought at (pats self on back, dislocates shoulder), I notice that the discount for PHYS (Sprott's CEF) has been consistently less. Anyone have a thought as to why?