gold+silver vs. gold

14 posts / 0 new
Last post
cedar's picture
cedar
Status: Bronze Member (Offline)
Joined: Oct 7 2008
Posts: 96
gold+silver vs. gold

I am in process of moving my cash to precious metals.

I like the business model, governance, and liquidity of Central Fund of Canada. They back all shares with 50/50 physical gold and silver.

I am debating whether it is better to be diversified in gold+silver or hold 100% gold.

Does anyone have an opinion on this matter?

Thanks in advance, Rob

Gaborzol's picture
Gaborzol
Status: Bronze Member (Offline)
Joined: Mar 24 2008
Posts: 38
Re: gold+silver vs. gold

It depends how serious you imagine the crash to be. If it is only to move out of dollars and store value, true, gold is more compact, easier to store safely and to transport. If it is to replace money at some point in a grimmer future as the medium of exchange, the unit of gold coins can be uncomfortably large.

Me? For me the secret is in variety. The more diverse my assets are, the more prepared I feel, even though I dont know as to what exactly.

 

Gábor

Bob Reid's picture
Bob Reid
Status: Member (Offline)
Joined: Jan 21 2009
Posts: 1
Re: gold+silver vs. gold

I think CEF (Amex) or CEF.A(TSX) is a good choice. Compare it GLD (NY) on a chart site and you will see
how it compares to gold alone. One pundant say gold
will run between $700 and $900 over the next serveral months
so you may want to buy when it is in the $700 to 800 range.

cedar's picture
cedar
Status: Bronze Member (Offline)
Joined: Oct 7 2008
Posts: 96
Re: gold+silver vs. gold

Thanks to both of you.

 Bob, my broker is trying to steer me to GLD over CEF.

This is my understanding of pros & cons:

GLD has better liquidity than CEF (but CEF liquidity seems good enough to me).

GLD has no premium over bullion NAV. CEF has recent 10-17% premium. (don't have good answer for this, anyone have any insights?).

CEF is located in and governed by Canada, which may be better when TSHTF. I like the simplicity of CEF business model and governace rules. (Have not read the GLD prospectus yet to compare).

Someone on this forum said GLD has several counterparties between them and the bullion, which may introduce some risk. CEF has audited bullion in bank vault.

 Rob

cedar's picture
cedar
Status: Bronze Member (Offline)
Joined: Oct 7 2008
Posts: 96
Re: gold+silver vs. gold

A little more info on CEF vs. GLD....

I read the GLD prospectus and the CEF prospectus. CEF is beautifully clear and simple. GLD is complicated and not readily understandable. 

I just got off the phone with the CEF CEO. I got him to explain the premium and what drives it. And to explain his advantages over GLD. 

Premium is driven by supply and demand for CEF shares. It typically varies between 10-17% but in bear gold market has been known to go slightly negative. 

Some portion of premium is due to tax advantage of CEF enjoyed by US shareholders.  

The main risk to me is buying now at a 10% premium and selling 3 years later at a 10% discount. I should be able to avoid this scenario by monitoring the premium.  

GLD is better than CEF for day traders (GLD price recalulated many times a day versus once a day for CEF). I intend to hold so don't care.

GLD does not have audited physical gold. CEF has physical gold in bank vault audited twice a year with strong governance rules.

 Risk of government confiscation is higher for GLD than CEF (but probability of this event is low in my opinion for next few years). 

All in all I like CEF better than GLD.

 

capesurvivor's picture
capesurvivor
Status: Platinum Member (Offline)
Joined: Sep 12 2008
Posts: 963
Re: gold+silver vs. gold

Cedar,

I have a little GLD but am going to get some CEF. My understanding is that they have certified gold bullion on premises, with one oz gold per 50 oz silver that is covered by the fund.  Folks have speculated whether GLD really has all that gold somewhere.

FWIW, Howard Ruff (I know, not a relaible predictor) is reco'ing CEF now.

 

JMHO.

 

SG

S Schauermann's picture
S Schauermann
Status: Bronze Member (Offline)
Joined: Jan 21 2009
Posts: 34
Re: gold+silver vs. gold

Does anyone have the nutritional value of gold? I am aware of its intrinsic value as a conductor and in its colloidal state as providing a sense of well-being, but in a real FHtO scenario,can you eat it? Methinks a good mule, harness and 100lbs open pollinated 10th generation seed would be worth its weight in gold. The principle of wealth and the lust for it is what got us into this mess in the first place. " If you don't have nothin', you don't don't have nothin to lose."

stusual's picture
stusual
Status: Member (Offline)
Joined: Jun 21 2008
Posts: 2
Re: gold+silver vs. gold

The counter party risks are the crux of the biscuit.

Caveat emptor!

 Stu

Burke's picture
Burke
Status: Member (Offline)
Joined: Jan 10 2009
Posts: 4
Re: gold+silver vs. gold

Two things to consider when you think about precious metals are Platinum and Silver. Platinum is MUCH rarer than gold, and is used in many industrial applications - catalytic converters, electronics, etc. It is also used in Jewelry. The same can be said of Silver. The beauty of Silver though, is that it has massive retail demand over gold. What I mean by this is that most people can afford an ounce of Silver at $12.00 (or even a kilo at $375) , whereas an ounce of gold at $900 might be a stretch and a kilo at $27,000 certainly out of the question for many. Because of the demand, bullion dealers are able to charge much higher premiums for Silver. Has anyone tried to buy physical silver recently? Its almost impossible to find, everyones out of stock, and those that have it are charging 20-50% premiums! The same for platinum. Where I live, gold is easy to buy in bar form at 2-3% premium. Platinum is impossible to get, I was offered a bar at $1500/ounce, a 55% premium to spot. To my mind, if you can find silver and platinum they should join gold in the "safety pouch".

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 348
Re: gold+silver vs. gold

http://www.etfconnect.com/select/fundpages/sectors.asp?MFID=3653

 A seemingly good site re ETF Premiums

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1988
reviews of gold and silver dealers

http://www.goldsilverchat.com/BBchat/viewforum.php?f=40

I nearly got stung by a dealer that turns out to be a ponzi scam. Caveat emptor!

lrodgers's picture
lrodgers
Status: Member (Offline)
Joined: May 30 2011
Posts: 1
re: gold+silver vs. gold

hold on to 100% gold

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
cedar wrote:  Bob, my
cedar wrote:

 Bob, my broker is trying to steer me to GLD over CEF.

Good clue that you should get a new broker.  At the very least, he should have compared CEF to SGOL.  Check the archives.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
here we go again
S Schauermann wrote:

Does anyone have the nutritional value of gold? I am aware of its intrinsic value as a conductor and in its colloidal state as providing a sense of well-being, but in a real FHtO scenario,can you eat it? Methinks a good mule, harness and 100lbs open pollinated 10th generation seed would be worth its weight in gold. The principle of wealth and the lust for it is what got us into this mess in the first place. " If you don't have nothin', you don't don't have nothin to lose."

Can we please lay this argument to rest?  It's been made so many times here, it's tiresome.  Check the archives.  Then take your mule (after it's been gutted by hungry people) and your seed (after the bugs and rodents have gotten to it) and bust frozen ground under the snow and ice in the middle of the winter when TS suddenly HTF.  And if disease, bugs, birds, animals, hail, drought, windstorm, flood, frost, etc. allow you to, harvest your crop a few months later.  That is, if you haven't starved to death by then. 

P.S.  And if you have considerable wealth, how many hundreds of mules are going to buy and how many tons of seed?

FWIW, cash, PMs, land, seed, fertilizer, tools, equipment, skills, knowledge, physical ability, health, etc. all have their place.   You don't want to dismiss any part of the package.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments