Precious and Base Metal Investing Message Board

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Gold/Mining/Energy : Precious and Base Metal Investing

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To: Claude Cormier who wrote (31747)	10/24/2004 8:49:41 PM
From: Taikun	Read Replies (1) of 39344

<This is a money losing proposition vs buying physical or a fund with no premium.> Claude, 1. Funds Most funds charge switching fees that can easily exceed CEF's premium. I can buy CDN$10000 CEF in my IB account for about CDN$17. Most funds will charge 2% to exit a position within 3 months in addition to expenses and possibly sales fees. 2. Physical Metals Most purchases of bullion involve quite a considerable premium both on the purchase and sale. For example: At current Kitco spot silver US$7.39: Silver Pool: US$7.51 1% premium (not including facilitation, shipping and insurance fees if you want delivery) Silver Bar Per Ounce: US$8.11 9.7% premium Eagles and Maples have higher premiums still. Even GoldMoney at $436 is a 2% premium over spot. I personally think CEF premiums are not too high. If I have a chink of USD in an account CEF is a nice investment that is quite negatively correlated to the index and unless you can park cash in a basket of currencies (I can't do this easily with my brokerage) that USD is a quickly depreciating asset. For cash I want to use to buy more gold juniors on dips, putting in Emerging Markets, Bonds all seem risky to me. I can hold CEF and easily sell, generate cash and use it to buy juniors on dips without worrying about significant erosion of principal. What would you do? David

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