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Gold/Mining/Energy : Canadian Warrants Only -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (6878)	1/18/2009 11:22:28 PM
From: PaperPerson	Read Replies (3) \| Respond to of 23102

$1,150 gold by june? Who knows? Nobody really. But if that WERE the case, the net asset value NAV of CMP Gold Trust, CMP-UN.TO, now c$8.29, should soar, along with the stock price on the toronto exchange. The strike price on the CMP-WT.TO warrants of jan. 2011 is c12.00. The price of the toronto-traded closed-end fund tonight is c$5.65, a 32 percent discount to NAV. this, after going public in jan 2008 at 10.00 and then crashing with the pm market late spring-summer-fall. the warrants last sell for about 50 cents. My average price is lower, maybe u.s.32 cents. Since well over half of the fund is in pure gold or solid producers, its NAV already is tracking upward very briskly in the last few months with the recovering gold stocks. i expect the discount to nav on the price of this fund to simply go away during the next gold run. Assuming this gold move occurs within the next year and a half or so, while the warrant life is good, the warrants should be very profitable. if the stock goes to c$15.00, a stock investor would make a profit of c$9.35 per share starting from here. the warrants meanwhile would be forced to c$3.00 from c50 cents, a profit of c$2.50 per warrant. ROI for the stock investor = 165 % ROI for the warrant investor = 500 % Above that, of course, the ROI on the warrants gets crazy. At stock c$20.00, the warrants have an intrinsic value of c$8.00 and the return is better than 1400 percent. The intrinsic value understates the value of the warrant in this case, because if i can exercise at 12.00, i get not just the stock but also another half-warrant that is good until 2013 at a strike of c$15.00. If this all transpires, i plan to exercise some of my warrants, taking some profits out of vanguard precious metals fund and transferring into this Dunde fund at the $12 strike. Michael