Wednesday, March 3, 2010

Gold ETFs Improve as Gold Hits All-Time High in Two Major Currencies

This post will be brief due to other obligations.

There is a worthwhile gold-related post at Jesse's Cafe Americain. It describes a new gold fund with physical gold held in Canada. The innovation with this fund is the ability of shareholders to convert shares to physical gold. If interested, please click HERE for Jesse's post. You can also check out the stock with the symbol PHYS or go to the fund's website HERE.

For a different view, please see the Seeking Alpha negative article on this fund HERE.

I have not yet investigated the fund in any detail and may comment further. My first reaction is that the Seeking Alpha article is a bit too harsh, though its points are likely valid.

Gold has set all-time price highs against the British pound and the euro.

While no powers-that-be have clued me in, my guess is that we see new highs in the U. S. dollar this year. My major concern is timing, given the profusion of gold ads on certain cable TV channels and the fact that the small "GTU" ETF has been trading at a 7+% premium to NAV lately. This should reflect optimism/pessimism by small investors, as the big players are too big to play in this one. I am happier to see a 2-5% premium.

PHYS is currently at about a 5% premium to NAV and if it has adequate liquidity, it might be a better play than GTU right now.

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