Investors Willing To Pay 31% Premium To NAV

[Quixote2]

http://www.zerohedge.com/article/investors-willing-pay-31-premium-nav-sprotts-physical-gold-etf-strike-over-global-fiat-deval

Investors Willing To Pay 31% Premium To NAV For Sprott's Physical Gold ETF In Strike Over Global Fiat Devaluation Insanity

Over the past month, gold has quietly become the only true flight to safety. Forget the dollar: the dollar is "safe" just as long as Bernanke does not decide to pull a Sunday night comparable to what the ECB did last night and strangle the greenback with one press release: frankly it is just not worth the imminent currency debasement risk, especially with the inversion in the EURUSD as the trading day has proceeded. But don't take our word for it: even with today's last bail out which is supposed to scare all shorts into covering, and unload all risk-free trades, Gold is still at $1,200. And for a far more material indication of what the market thinks of not just gold, but of representations of gold holdings by ETF's with "imaginary" unaudited stashes all over the world, take a look at the Sprott PHYS physical gold ETF, and specifically the premium over its NAV. Today it hit an all time record of 31%. The NAV differential has steadily crept higher since the launch of PHYS. Investors are willing to pay 30% more than the real value of holdings just for the knowledge that the gold backing their "assets" actually exists.

[JohnQPublic]

http://www.zerohedge.com/article/investors-willing-pay-31-premium-nav-sprotts-physical-gold-etf-strike-over-global-fiat-deval

Investors Willing To Pay 31% Premium To NAV For Sprott's Physical Gold ETF In Strike Over Global Fiat Devaluation Insanity

Over the past month, gold has quietly become the only true flight to safety. Forget the dollar: the dollar is "safe" just as long as Bernanke does not decide to pull a Sunday night comparable to what the ECB did last night and strangle the greenback with one press release: frankly it is just not worth the imminent currency debasement risk, especially with the inversion in the EURUSD as the trading day has proceeded. But don't take our word for it: even with today's last bail out which is supposed to scare all shorts into covering, and unload all risk-free trades, Gold is still at $1,200. And for a far more material indication of what the market thinks of not just gold, but of representations of gold holdings by ETF's with "imaginary" unaudited stashes all over the world, take a look at the Sprott PHYS physical gold ETF, and specifically the premium over its NAV. Today it hit an all time record of 31%. The NAV differential has steadily crept higher since the launch of PHYS. Investors are willing to pay 30% more than the real value of holdings just for the knowledge that the gold backing their "assets" actually exists.



This is interesting. I haven't been able to read the article in entirety yet, because as usual, Zerohedge is out of bandwidth.

You can still buy real physical for 5-8% premiums, but not easily in the quantities that some big investors want I guess. If this is true, watch for premiums on physical to skyrocket soon.

[Book]

Toronto-based Sprott Asset Management, a newcomer to the U.S. ETF industry, became the latest issuer to introduce a physically-backed gold ETF last week, debuting the Sprott Physical Gold Trust (PHYS) on Friday. The new fund “was created to invest and hold substantially all of its assets in physical gold bullion” and will compete directly with several existing physically-backed gold bullion funds.

While PHYS will be similar to existing gold ETF products, there are a few key differences. PHYS will store the underlying gold bullion at the Royal Canadian Mint, a Canadian Crown corporation that acts as an agent of the Canadian government whose obligations generally constitute unconditional obligations of the Canadian Government. With the launch of PHYS, investors now have the ability to invest in gold bullion stored in a number of physical locations, including the U.S., Canada, UK, and Switzerland (it should be noted that the iShares gold ETF stores gold in multiple locations, including Toronto).

Anybody who thinks a "fund" or "ETF Product" is the same as physical possession is deluded.

:oo-->

[JohnQPublic]

Toronto-based Sprott Asset Management, a newcomer to the U.S. ETF industry, became the latest issuer to introduce a physically-backed gold ETF last week, debuting the Sprott Physical Gold Trust (PHYS) on Friday. The new fund “was created to invest and hold substantially all of its assets in physical gold bullion” and will compete directly with several existing physically-backed gold bullion funds.

While PHYS will be similar to existing gold ETF products, there are a few key differences. PHYS will store the underlying gold bullion at the Royal Canadian Mint, a Canadian Crown corporation that acts as an agent of the Canadian government whose obligations generally constitute unconditional obligations of the Canadian Government. With the launch of PHYS, investors now have the ability to invest in gold bullion stored in a number of physical locations, including the U.S., Canada, UK, and Switzerland (it should be noted that the iShares gold ETF stores gold in multiple locations, including Toronto).

Anybody who thinks a "fund" or "ETF Product" is the same as physical possession is deluded.

:oo-->


Even more bizarre is that they are willing to pay 5x the premium of real physical to get it!

[Saul Mine]

take a look at the Sprott PHYS physical gold ETF, and specifically the premium over its NAV. Today it hit an all time record of 31%.

In other words, they have convinced themselves that one turd is cleaner than another!

[gunDriller]

what's "NAV" <-- Newb Question 8)

[Hugginator]

Net Asset Value - NAV
What Does It Mean?
What Does Net Asset Value - NAV Mean?
A mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both cases, the per-share dollar amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.
Investopedia Says
Investopedia explains Net Asset Value - NAV
In the context of mutual funds, NAV per share is computed once a day based on the closing market prices of the securities in the fund's portfolio. All mutual funds' buy and sell orders are processed at the NAV of the trade date. However, investors must wait until the following day to get the trade price.

Mutual funds pay out virtually all of their income and capital gains. As a result, changes in NAV are not the best gauge of mutual fund performance, which is best measured by annual total return.

Because ETFs and closed-end funds trade like stocks, their shares trade at market value, which can be a dollar value above (trading at a premium) or below (trading at a discount) NAV.