GTU

[rickb]

Closed at about a 5% discount today.

I remember debating with someone the merits, and lack thereof, of closed ended gold funds. He was adamant that the premiums could only go one way no matter how strongly I cautioned that when gold started to sink, that the premiums could indeed go negative.

The premium for GTU (or PHYS or any closed ended fund) can certainly be positive or negative.  The ultimate hammer for any closed ended fund that prevents the premium from going too far negative is the possibility of the share holders voting to dissolve the fund (in which case the assets are sold and the share holders receive cash equal to the NAV, not the discounted market price of the shares).  PHYS (but not GTU) allows shares to be redeemed for gold at current NAV (not market price) - but only in amounts greater than one London Good Delivery bar (400 oz).  This feature of PHYS would tend to limit how far negative its premium can go.

[AdamA]

Closed at about a 5% discount today.

I remember debating with someone the merits, and lack thereof, of closed ended gold funds. He was adamant that the premiums could only go one way no matter how strongly I cautioned that when gold started to sink, that the premiums could indeed go negative.

The premium for GTU (or PHYS or any closed ended fund) can certainly be positive or negative.  The ultimate hammer for any closed ended fund that prevents the premium from going too far negative is the possibility of the share holders voting to dissolve the fund (in which case the assets are sold and the share holders receive cash equal to the NAV, not the discounted market price of the shares).  PHYS (but not GTU) allows shares to be redeemed for gold at current NAV (not market price) - but only in amounts greater than one London Good Delivery bar (400 oz).  This feature of PHYS would tend to limit how far negative its premium can go.

Very interesting.

Thanks for posting that.

I have always been more comfortable with the idea of a CEF vs an ETF for gold ownership.

I'll add this to the list of reasons.