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Gold/Mining/Energy : Gold Price Monitor

GDXJ 136.33

-0.4%

Feb 10 4:00 PM EST

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To: bistineau_la who wrote (87489)	6/27/2002 11:08:27 PM
From: Douglas M. Benedict	Read Replies (1) of 116976

Here's an answer..and it may explain the "premium" factor as well... 1) In Canada, registered (personal self-administered) pension plans cannot hold physical Gold or Silver...hence the Fund provides a means to do so..(thus a premium is justifiable in a Demand driven market) 2) Central Fund provides "liquidity" without assaying costs...(try taking that to the bank!) 3) Costs of purchasing Silver bars in Canada from Bank of Nova Scotia require a Bid/Ask spread ($0.25 U.S.), plus a bar charge ($0.30 U.S.), plus DELIVERY charges of ($0.50 U.S.) an ounce...for a total surcharge of ($1.05 U.S.) for taking delivery (for those of us who are distrustful of depository receipts)...AND that is only 1 way...thus you are looking at a 20% premium plus another 20% premium to sell in a flat market... Given the above...Liquidity, assaying avoidance, storage avoidance and safety (since CEF is audited with no lending out policy)...in a market INTERESTED in precious metals, a premium is not out of the question...LOGICALLY, it would be nicer to buy at a discount...but given the above and THE RRSP allowance...one can understand why a premium could exist and yet still not deter purchasers seeking any of the above benefits... I leave it to you, to decide if these benefits and flexibility warrant the premium...(keep in mind that holding the physical does not preclude one from using CEF as a trading vehicle for that portion of one's Investment Portfolio...in fact it enhances it...) Respectfully...

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