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Strategies & Market Trends : Ride the Tiger with CD

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To: Cogito Ergo Sum who wrote (202270)	8/8/2011 10:57:03 PM
From: stuffbug	Read Replies (1) of 312955

No, not if I understand you correctly. CGL essentially owns physical gold and a short on the USD. The goal is to capture the percentage gain that gold makes in terms of the US confetti dollar. If the CDN dollar goes down versus the US dollar, then gold is actually going up by a higher percentage in Canadian dollar terms. In which case, you would be better off with no hedge. CEF has not had much of a premium this past month or so. I think they recently had a secondary offering. CEF is a closed fund. So, if there is big demand for the shares, the premium rises. When the premium gets too large, the fund will issue more stock, which cuts down the premium.

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