Jim Letourneau's Blog

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Central Fund vs. Central Gold Trust

Not very many people predicted that gold prices would drop after a round of financial institution failures. It seems counter intuitive.  People are going to start looking for safe havens, boring uncomplicated investments that are simple to understand. Precious metals may still decline over the next few months but they won't implode the way that many large financial institutions have.

This morning I checked out 2 safe haven investments - Central Fund of Canada Limited AND Central Gold Trust. Both have similar management. Both store bullion in Canadian bank vaults. Both trade in Canada and the US. Both are closed end investments.
The difference is that Central Fund of Canada Limited holds gold (59.2%) and silver (36.9%) while the Central Gold Trust is 100% gold.
Central Fund of Canada Limited
Central Fund of Canada traded at a 13.8% premium for CEF and a 13.3% premium for CEF.A on Friday.

Central Gold Trust
Central Gold Trust is traded at a 9.7% premium to NAV on Friday.

Silver tends to rally more than gold on a percentage basis when the markets get bullish so if you like excitement you might prefer the Central Fund. On the other hand there is no substitute for gold.