Here are the nuts and bolts of the CEF offering.
I imagine they had priced the shares at $10.80 before they took off last week.
Expect they will quickly resume their upward climb as soon as the new shares are cleared thru the market.
Again, as you pointed out, this new cash will be invested in additional gold and silver bullion.
Disagree that the ETF's are a better investment here.
They are subject to the uncertainty that characterizes all US markets here as well as not being totally in physical metal.
CEF has to do this to grow.
Your point regarding the premium is good though. Just hard to pick entry points based on the premium with this much volatility in the markets.
I consider anything around the new offer price a buying opportunity though, based on the insanity occurring with the financials and the bailouts.
Ownership participation in a pile of gold and silver in the basement of a Canadian bank has a soothing effect on my nerves here.
"Central Fund of Canada Limited (“Central Fund”) of Calgary, Alberta announced today that it has entered into an underwriting agreement with CIBC World Markets Inc. under which the underwriter has agreed to buy and sell to the public, in Canada and in the United States under the multijurisdictional disclosure system, 11,900,000 Class A Shares of Central Fund.
The offering will be made under a second prospectus supplement to Central Fund’s US$750,000,000 base shelf prospectus dated March 31, 2008.
The purchase price of U.S.$10.80 per Class A Share is expected to result in gross proceeds of approximately U.S.$129 million. Substantially all the net proceeds of the offering have been committed to purchase gold and silver bullion, in keeping with the investment policies established by the board of directors of Central Fund, for settlement at closing of the issue. The additional capital is expected to reduce the annual expense ratio in favour of the shareholders of Central Fund.
Closing is expected to occur on or about September 26, 2008"
centralfund.com |
