Gyroscopic Investing

These windows tend to open and close quickly.

It looks like it's about 1% below NAV right now.

Apparently closed with a 3.6% premium.

Hmm.

Yesterday's price showed a discount of 1.9% to NAV.

I don't know how you have a 5.5% swing in value when the change in the value of the underlying assets is less than 2%.

Thank you for pointing that out, though.  Earlier I felt smart, now I just feel confused.

MediumTex wrote: Earlier I felt smart, now I just feel confused.

Welcome to my life. 

AdamA wrote:

MediumTex wrote: Earlier I felt smart, now I just feel confused.

Welcome to my life. 

Wait a second, aren't people's lives in your hands?

One problem in tracking the premium/discount on GTU is that the stock market and the precious metals markets do not have identical trading hours.  So the premium/discount posted by GTU is a snapshot that markets may rapidly change.

There is a Google spreadsheet somewhere that does real-time tracking of GTU, but danged if I can remember where it is.

WildAboutHarry wrote: One problem in tracking the premium/discount on GTU is that the stock market and the precious metals markets do not have identical trading hours.  So the premium/discount posted by GTU is a snapshot that markets may rapidly change.

There is a Google spreadsheet somewhere that does real-time tracking of GTU, but danged if I can remember where it is.

I use my own spread sheet.
The problem is every so often when GTU NAV page updates the layout is slightly different and this causes me to have to manually edit my spread sheet to GTU’s new layout so it can import GTU holdings. I suspect that the online sheets have the same problems at times and this is what causes them to not work. I am used to this so I can fix my sheet in a couple of seconds. This particular sheet I use has a small delay because it updates GTU market trading price from MSN site . If I wanted to actually trade GTU I would update the price from my brokerage account to get real time.





https://docs.google.com/spreadsheet/ccc ... i40L#gid=0

The old Google sheet was taken down.

WildAboutHarry wrote: One problem in tracking the premium/discount on GTU is that the stock market and the precious metals markets do not have identical trading hours.  So the premium/discount posted by GTU is a snapshot that markets may rapidly change.

There is a Google spreadsheet somewhere that does real-time tracking of GTU, but danged if I can remember where it is.

Looking at the GTU site HERE, it appears they are using the London Gold Second Fixing which closes at 11:00 am eastern.  Then they apply the closing price of GTU at 4:00 pm eastern to calculate the premium/discount.  What a dumb system.  We should write a letter!

Steve, that is a great tool.  Bookmarked!

Thanks Steve!

Making your own spread sheet really is not hard.
Basically GTU owns a certain amount of ounces of Gold, this does not change too often
GTU also holds some cash, this varies by a small amount daily
If you multiply the amount of ounces of Gold by the spot price , you know how much the gold is worth at any given time. When you add the cash they have you then have the total value. When you divide the total value by the number of shares issued (number of Units Outstanding) , which also does not change very often you get the net assest value. The difference in the net assest value and what GTU is trading at is the premium or discount.

Anyone know of a way to set up a program to email or text you when the premium falls below a certain point?

BearBones wrote: Anyone know of a way to set up a program to email or text you when the premium falls below a certain point?

Do you program?

Fetch the current prices, do the calculations, etc. using a program rather than a spreadsheet.  Run that program periodically using cron (or windows scheduler) and have it email you when your threshold is reached.  You could run the program at home, or on a webhost somewhere such as an amazon instance.

For the program, I prefer python.  In python you can use BeautifulSoup to process and extract information from web pages if that is the only way to get the data you need and other libraries to send mail/text.

You may be able to do similar with excel vbscript and hook it to outlook to send mail.  I don't know and I'd have to be paid plenty to even try.

AgAuMoney wrote:For the program, I prefer python.  In python you can use BeautifulSoup to process and extract information from web pages if that is the only way to get the data you need and other libraries to send mail/text.

I also use Python for extracting the GTU data, although it has been a while since I've tracked GTU diligently.  I've used BeautifulSoup but I prefer TableParse.  Gets to the same result, though.  I really like Python for this kind of thing.

Here is what I get as of now for GTU:

Gold Price: $1709.80
London Gold: $1707.00
Total Ounces: 704652
Total Cash: $20374586.00
Units: 19299000
Ounces per Unit: 0.0365
Cash per Unit: $1.06
NAV: $63.48
Share Price: $65.96
Premium/Discount: 3.75%
Date: 03/04/2012

The gold price is from Kitco (spot market is open now), the share price is from Yahoo (Friday's close), and everything else is from the GTU page (Friday's data).  DISCLAIMER: I've not checked the "guts" of this program for a while, so the numbers above are for entertainment purposes only.

Can't I just rely on you guys to tell me when's a good time to buy? 

Reub wrote:Can't I just rely on you guys to tell me when's a good time to buy? 

Hold it...hold it...hold it...NOW.  Oops.  Missed it.

You mean no personal text messages at just the right moment? 

Looks like GTU is currently selling at about a 3.5% discount.

rickb wrote: Looks like GTU is currently selling at about a 3.5% discount.

Discount seems to have widened even more.

Has anyone read The Winner's Curse by Thaler?  I don't know if his explanation for closed end funds trading at a discount would apply to a gold ETF, but maybe someone smart might offer some insight?

Kriegsspiel wrote: Has anyone read The Winner's Curse by Thaler?  I don't know if his explanation for closed end funds trading at a discount would apply to a gold ETF, but maybe someone smart might offer some insight?

I haven't...can you summarize his explanation?

The sister fund, Silver Bullion Trust, closed at 10.5% discount yesterday.

http://www.silverbulliontrust.com/net_asset_value.htm


Not sure how/why there can be such a large discrepancy.

murphy_p_t wrote:

Kriegsspiel wrote: Has anyone read The Winner's Curse by Thaler?  I don't know if his explanation for closed end funds trading at a discount would apply to a gold ETF, but maybe someone smart might offer some insight?

I haven't...can you summarize his explanation?

http://faculty.chicagobooth.edu/Richard ... 0funds.pdf

That looks like what was in the book.

I'm new to the Permanent Portfolio and I was reading a suggestion in another thread to buy GTU since it is currently at an 8% discount.

Will someone please explain what this means? I know nothing about GTU. What exactly is GTU and how does buying it now vs. something like SGOL (my current holding for gold) benefit me? How does the discount thing work? Do I buy at a discount now and then sell at the non-discount price when I am ready to sell?

It seems GTU is popular on this site. What makes it so attractive for the 25% gold position in the Permanent Portfolio?

Also, is it based in the US? I only ask because I read that Dr. Marc Faber suggested SGOL or AGOL to protect from the possibility of the US Govt confiscating gold (as they apparently did in the 1930's).

Sorry if it seems I'm hijacking this thread, but I didn't think my questions were worthy of another GTU thread.

Thanks in advance.

samuraidog wrote: I'm new to the Permanent Portfolio and I was reading a suggestion in another thread to buy GTU since it is currently at an 8% discount.

Will someone please explain what this means? I know nothing about GTU. What exactly is GTU and how does buying it now vs. something like SGOL (my current holding for gold) benefit me? How does the discount thing work? Do I buy at a discount now and then sell at the non-discount price when I am ready to sell?

It seems GTU is popular on this site. What makes it so attractive for the 25% gold position in the Permanent Portfolio?

Also, is it based in the US? I only ask because I read that Dr. Marc Faber suggested SGOL or AGOL to protect from the possibility of the US Govt confiscating gold (as they apparently did in the 1930's).

Sorry if it seems I'm hijacking this thread, but I didn't think my questions were worthy of another GTU thread.

Thanks in advance.

Welcome to the forum! I'll see if I can correctly state this stuff. GTU is a closed-ended fund so it holds a fixed amount of gold and the price for what it is traded for is more based on supply and demands and bounces around the gold price. When something like an etf like IAU trades greater than the price of gold, that delta price then goes towards purchasing more gold to have the price of IAU reflect its underlying investments. GTU however has a fixed investment and fluctuates on what people want/don't want.

When it trades at a discount (pretty rare) that mean that you're "paying" for less gold than what you're actually getting in terms of the underlying investments. You then hope that the price will eventually go back to the actual underlying investments rate (i.e. you can purchase a set amount of gold at a 8% discounted price essentially).

Hopefully that semi-helps. As for also why we like GTU on here, one of the reasons is with a particular tax form, you can have it classified as a long-term capital gains and pay only the 15% tax on gains versus the ordinary tax rate for collectibles.

samuraidog wrote: I'm new to the Permanent Portfolio and I was reading a suggestion in another thread to buy GTU since it is currently at an 8% discount.

Will someone please explain what this means? I know nothing about GTU. What exactly is GTU and how does buying it now vs. something like SGOL (my current holding for gold) benefit me? How does the discount thing work? Do I buy at a discount now and then sell at the non-discount price when I am ready to sell?

No doubt you'll get a lot of pretty technical explanations to this question.

The simplest way I can explain it (b/c I don't understand it perfectly myself) is to say that GTU is a close ended fund. 

The practical bottom line is what tends to happen is that when gold starts to rally, GTU will sell at a premium, meaning that the shares of the fund sell for more than what the gold in the fund is worth as measured by spot price.

When gold is falling, it tends to sell at a discount, meaning that it will sell for less than the gold in the fund is worth.

With ETFs this shouldn't happen.  ETFs create additional shares to keep their price the same as spot.  CEFs can't do that.  By definition, they have to maintain a fixed number of shares and so are more subject to the whims of supply and demand, beyond that of the underlying metal (I think).

samuraidog wrote: It seems GTU is popular on this site. What makes it so attractive for the 25% gold position in the Permanent Portfolio?

I like GTU because I feel like it's a safer fund.  Its volts are audited regularly, they don't lend, they don't use futures contracts.  It's sister fund CEF (which has gold and silver) has been around for a long time and never had a problem.

I don't what the reality is with some of these other ETFs, but it's just more difficult for me to understand what goes on with some of the lending and futures, and most of them are pretty new.

Also, is it based in the US? I only ask because I read that Dr. Marc Faber suggested SGOL or AGOL to protect from the possibility of the US Govt confiscating gold (as they apparently did in the 1930's).

They're Canadian funds. 

Sorry if it seems I'm hijacking this thread, but I didn't think my questions were worthy of another GTU thread.

I think we all like threads like this.