CEF a steal at 9% discount

[coinstar]

The closed end fund CEF looks like a steal at 9% discount to NAV. I bought some on Friday for my VP since I think gold and silver are both underpriced. Especially given the 9% discount, it seems incredible.

I've been considering buying some physical silver (for fun and a little VP play) and been watching the silver markets the last few months. Lately, there's a shortage of physical silver and the premiums on physical silver have shot up enormously. We're talking 20% premiums on 1 ounce coins WHEN you can find them. Even 100 ounce bars are going at a 10% premium. I've also been following precious metal deals on the internet and even though gold has dropped $100 an ounce in the last few months or so, the number of deals have sharply declined in the last few weeks. It used to be that there'd be a special for american gold eagles at $20 above spot. Now the "deal", when they even offer them, is $50 above spot. Seems like physical metals are in demand and paper metals are taking a dive. Which is likely to mean paper assets will follow in suit, upwards.

Compare these recently hiked premiums for physical to a 9% discount for CEF, which is 60% gold and 40% silver and CEF seems like a steal. If you're willing to hold it until gold and silver go back up, I expect the discount to disappear and you'll gain both the gold/silver increase PLUS the discount-related gain.

Given what happened with GTU recently, it's possible CEF will be forced into a 5% discount redemption policy as well, which will instantly reduce the discount from 9% to 5%, as it did with GTU. Also, if silver shoots up, we can see a premium to the NAV, as happened a few years ago in CEF.

On a side note, if you like conspiracy theories (and I do!!) there's talk that JPMorgan and other banks have been naked short selling paper gold and silver in an attempt to manipulate the price down. That can only last so long...

[mathjak107]

as the saying goes  , markets can remain  irrational a lot longer than many can remain solvent waiting.

[Libertarian666]

as the saying goes  , markets can remain  irrational a lot longer than many can remain solvent waiting.

I can remain solvent indefinitely.
However, it's also not that hard to imagine that someone would take a run at CEF the way they have at GTU, or maybe the managers of CEF will head that off by preemptively allowing cash redemption at 5% discount to NAV, the way they have at GTU.

[Libertarian666]

I just cashed out most of my GTU to get the tax loss, and bought CEF with the proceeds. Maybe someone will take a run at CEF too, so I can get the discount-narrowing bump.