Precious and Base Metal Investing Message Board

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Gold/Mining/Energy : Precious and Base Metal Investing

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To: stevenallen who wrote (32241)	11/11/2004 11:58:45 PM
From: The Vet	Read Replies (3) of 39344

The only thing that maintained CEF's premium IMO was the lack of competition. Once the ETF is operating there will be no incentive for CEF to trade at a premium, and as it is a closed end fund there is no simple arbitrage possible. It could just as easily trade at a substantial discount to NAV and absolutely nothing could be done about that unless the fund bought back its own stock.. I don't even know if that is possible under their charter. The ETF will always trade within a percent or so of the spot price, simply because the market maker arbitragers will scalp any difference by buying gold, converting to, then selling shares or redeeming gold for stock and selling metal with any significant variation of the share price away from spot in either direction.

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