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I actually like the mnt premium. Yes you need to be aware of it, but it works more like real gold. Call a RCM dealer and ask what a gold maple is selling for, then subtract the spot price.... there is the same premium on physical that there is with mnt. Probably cause there is a process in place to convert your mnt into physical via the RCM and that option as far as I know doesn’t exist with other gold ETF’s.
 

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I actually like the mnt premium. Yes you need to be aware of it, but it works more like real gold. Call a RCM dealer and ask what a gold maple is selling for, then subtract the spot price.... there is the same premium on physical that there is with mnt. Probably cause there is a process in place to convert your mnt into physical via the RCM and that option as far as I know doesn’t exist with other gold ETF’s.
Except it doesn't always work like that. I've also seen MNT go as far as 1.5% discount to NAV. It's not a steady premium.

According to the records I've kept, this large MNT premium only appeared when the shutdown started. One possible explanation is that the mechanism of redeeming MNT for physical gold (normally available) may be offline due to the shutdown. So perhaps the premium is there because large unit holders aren't able to redeem units.
 

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Possible, but I bet most people buying MNT are not planning to redeem for physical. I would bet that most people that are buying it, like the fact that it is a Crown Corp and thus your purchase is backed by the RCM / the Queen. The fund also does not expand and contract to suit market demand. So, there are a few factors at play, there is true supply / demand behind the price which is supportive of real market value. You could say that the MNT premium might actually be a local/Canadian version of the GVZ (Gold Volatility Index) its just that there is no daily graph available to show the premium/discount. Also, if just say MNTs price is accurate, it could highlight a flaw in what might be considered a manipulated gold price, so maybe what we consider golds price, is being manipulated artificially down. I also think its a scam that when gold ETFs need more gold, so they can sell more shares, it just seems to happen overnight, and when they need to liquidate gold or erase units, it also happens overnight and I sit thinking did they ever really have the physical to support the outstanding units? and if so, How on earth can they acquire and disperse so much so fast. I guess in the end, I like MNT, it just requires that investors understand that there is a 'premium/discount' to be aware of.

Also, say when MNT is high and I rebalance (sell), I capitalize on the premium. Thats a free 1-7%, and one day when its down/discount and I need to grab some more (buy) to hit my target, hopefully I am at fair price or a discount. This system sees me profiting on the discount/premium. Its kinda timing the market but I cant help that this product works in this capacity.

My wifes pension will be moved into a LIRA in 2 months and if MNT has a premium I will be buying CGL, as its a good second option until I can get MNT at a neutral price or hopefully a discount.
 

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Today MNT shows an 11% premium to NAV so I contacted RCM for their explanation. Below is what I hear from them via email. FYI.

"Thanks for your inquiry. As of early March we have seen the premiums on physical gold bars and coins begin to increase significantly due to supply chain disruptions related to the impact of the covid-19 pandemic. Production at mines, mints and refineries has been adversely impacted while commercial air transport is operating at much reduced levels, meanwhile the demand for bullion has increased significantly. One of the key differences between ETRs and other gold investment listings is that ETRs are exchangeable for physical (EFP), i.e. they have embedded monthly right to redeem for physical gold. Another consideration is in terms of structure - ETRs do not have the daily creation mechanism of ETFs, there is a set number of ETRs outstanding and we may only issue new ETRs from time to time. As you mentioned in your message there is now a substantial premium on physical gold over the spot gold price that is widely quoted. The premium to NAV for gold ETRs has likewise grown to trading currently at the highest levels since the IPO in 2011. Whether this premium remains elevated or declines from here if production returns to normal and supply chains improve is difficult to determine. I've attached a note from CIBC that shows an example of the dislocation that we've seen recently between the spot and physical market prices. The May gold futures contracts on COMEX expire tomorrow as well which may contribute to volatility."

20190
 

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The only reason gold is not 10 thousand an ounce is because there is paper gold.
Economic Terrorists are printing paper gold in the same way that the Federal Reserve is printing dollars.
With this Covid-19 economic collapse many people asked to redeem the paper gold for physical gold and were unable to do so. Those Economic Terrorists who sold the paper gold will soon need to declare bankruptcy because it was all a scam and they do not have the physical gold.
 

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It is surprising to see such a high premium for MNT. I wonder why it is not arbitraged away. Institutional investors (and even retail investors) could short MNT and go long an equivalent in CGL.C or GLD. That could be a very good return without exposure to the volatility of gold. There is of course a possibility that the premium will grow resulting in losses.

If I owned MNT, I would immediately sell it, buy back the underlying in other gold ETFs (resulting in no net change in gold exposure) and pocket the difference. It may not be there after things settle down.
 

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It is surprising to see such a high premium for MNT. I wonder why it is not arbitraged away. Institutional investors (and even retail investors) could short MNT and go long an equivalent in CGL.C or GLD. That could be a very good return without exposure to the volatility of gold. There is of course a possibility that the premium will grow resulting in losses.
It is a good question. One issue in Canada is that we have a lot of ETFs, but not a lot of institutional market makers or authorized participants. Sometimes it's hard to get an institution interested in this kind of market-making... there has to be enough volume, etc to make this worthwhile.

You can see from the bid/ask spreads on MNT that it is lacking in market-making. Why exactly, I don't know, but that's the reality. Well one reason is obvious... they don't have the same creation and redemption method as regular ETFs. So an institution can't one day decide to "make the market" in MNT. To really do this, they would have to redeem for physical gold. That's a whole different ball game than electronic trading and basket creation/redemption.

MNT is not an ETF. It does not have the usual ETF mechanisms, so it can't be easily arbitraged the same way (talking about the ideal arbitrage, where you substitute it for its precise underlying thing).

If I owned MNT, I would immediately sell it, buy back the underlying in other gold ETFs (resulting in no net change in gold exposure) and pocket the difference. It may not be there after things settle down.
This makes sense if you think gold ownership through MNT is equivalent to paper gold owned elsewhere. Personally I am not sure they are equivalent, which is why I don't do what you are suggesting. I think that there may be a tangible benefit holding a gold obligation backed by Canada. As I mentioned somewhere else, MNT is almost like a gold-backed digital currency. It's a certificate/ claim of gold, backed by The Queen.

One consequence of doing the arbitrage you suggest is that you may be selling a fundamentally more valuable thing, for a run-of-the-mill paper gold obligation. It's not a terrible idea, and I thought of doing the same, but decided to hold onto MNT.

On the other hand, when I was filling up my TFSA with new purchases, I did actually buy CGL.C instead of MNT, because I didn't want to buy at the premium.
 

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A counter-argument to my own view above is that, if we consider the history of Great Britain, there is a long history of The King/Queen not honouring their gold obligations. Britain devalued (against gold reserves) several times, for example 1931.

So from that perspective, someone may argue that the gold promise of a commercial institution (like Blackrock) could be superior to a Crown corporation. So maybe it really is a good trade to sell MNT, pocket the premium, and buy CGL.C.
 

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A counter-argument to my own view above is that, if we consider the history of Great Britain, there is a long history of The King/Queen not honouring their gold obligations. Britain devalued (against gold reserves) several times, for example 1931.

So from that perspective, someone may argue that the gold promise of a commercial institution (like Blackrock) could be superior to a Crown corporation. So maybe it really is a good trade to sell MNT, pocket the premium, and buy CGL.C.
The premium that MNT carries suggests to me that the market is more in agreement with your original position (MNT is safer than gold ETFs). My view is that MNT would be safer and would justify a slight premium (maybe 1 or 2%), but 15% is bizarre. So I would be willing to take the small risk for the arbitrage. However, if I were a buy-and-hold investor, I would look for an opportunity to revert back to MNT.

There was this interesting story about (originally West) Germany keeping gold reserves at the NY Fed. During the financial crisis it was alleged that the authorities in NY demurred when the Germans wanted to audit the gold. But this was later denied and Germany got all of its gold back even though it took a few years.
 

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The premium that MNT carries suggests to me that the market is more in agreement with your original position (MNT is safer than gold ETFs). My view is that MNT would be safer and would justify a slight premium (maybe 1 or 2%), but 15% is bizarre. So I would be willing to take the small risk for the arbitrage. However, if I were a buy-and-hold investor, I would look for an opportunity to revert back to MNT.
No question this is an unusual situation and we're all just guessing at the true cause. But I have also been thinking about to my previous favourite physical position, the Central Fund of Canada. This was a closed end fund and had a rather static amount of bars sitting in a vault.

At times, it had a premium to NAV (and got quite large). At times, a discount. CEF had been around for decades and had shown this pattern... it's not like anyone was arbitraging it back and keeping it exactly at NAV.

The reason this is relevant is because I happily held CEF for the long term despite these fluctuations in premiums and discounts. And in hindsight, I think it was the right idea. Some of those premium and discount periods lasted a long time, and I don't think I could have traded around it using GLD and SLV equivalents.

In hindsight, I am glad I simply held CEF for the long term without getting caught up on deviations from NAV. It's kind of inevitable for a closed end fund, and MNT is a similar structure.
 

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For people who are interested in adding a gold weight to their portfolio, this might not be a bad entry now with CGL.C at 19.60. The price has come down off its highs.

Of course, it could fall a lot further. Gold behaves differently than stocks... which is a big part of the appeal :)
 

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Part of the price drop is due to strengthening of the Canadian dollar, which has jumped about 7% since its mid March lows.

In the long run, I am bullish on gold, given we are beginning a whole new decade of low-interest rates.
 

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90 percent of my buying 13 oz last January is because I believe that China is soon going to introduce a gold backed currency to complete against the Greenback.

Other than that ...... no chart ..... no graph ...... no accounting has any truth to it any more.

They just printed Trillions out of thin air and are now trying to convince us that it now has value. And the only way they continue to claim the dollar has any value is because they will nuke you if you claim or pretend otherwise.

The U.S. financial system is like that circus game of Fish Pond and where you throw a line into a blind spot and a circus employee attaches an ornament.

I need to see the proof that all those ETF's which sell paper gold really have the physical gold on hand.

We all know that is untrue.
 

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calm - I do think that MNT/MNS is correctly supplied...
Are you a dealer or something.
I did not deliberately mean to insult you.
I am sorry. I have no idea what MNT/MNS is/was.
I don't trust nobody. What good is a piece of paper on the morning that China opens the currency?
Is that when people intend to run around trying to cash in the chips?
In all the confusion, you will have no time to demand the physical.
Imagine how long is the line up at the mint going to be? Longer than the Covid-19 bank line I would imagine.
In my mind if you have enough trust to buy paper gold, well ..... you might as well just buy U.S. currency. Same type of trust.

If not physical gold, I would be buying some land or property. Even if it is a swamp.
You will still have something of value when/if the GreenBack collapses.
I am 72, but if I was 32, I would be looking for a swamp.
 

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I know there's no point in trying to time the market but if you do not have a portion of your portfolio allocated to gold, would now be a time to start a position given the price? Or would it be prudent to wait for an economic recovery? Buying at such a high point seems wrong.
 

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I know there's no point in trying to time the market but if you do not have a portion of your portfolio allocated to gold, would now be a time to start a position given the price? Or would it be prudent to wait for an economic recovery? Buying at such a high point seems wrong.
That's a very difficult question. This could be the peak price in gold before it drops for many years to come, or this could be the lowest price in gold you'll ever see going forward. Both are possible.

I would look at this a different way. Have you settled on a finalized investment plan, or asset allocation that you believe in? I would think very hard (and take your time) deciding on the asset allocation that you want. Once you are 100% committed to the idea, then go and implement it. And if that means buying gold, then yes, buy whatever gold is needed to accomplish that plan.

I say this because you don't want to be buying (or selling) assets just in reaction to moods or popular opinions of the day. The worst thing would be to buy gold just because it looks like a good idea today, maybe because you heard some analyst say that inflation is now a danger, or you heard some gold nut with some end of the world theory.

Those are good ways to lose money. You could change your mind in the future.

So I would suggest spending the time and energy deciding on your asset allocation plan. Consider the pros and cons. Consider the potential flaws with it. Look at historical results, both the bad and good. Make sure you are absolutely convinced that the plan is solid.

This forum is a good place to bounce your asset allocation plan off others.

Then, write the plan down somewhere. For example, mine says: 20% gold, 30% stocks, 50% bonds. Am I convinced that this plan is good? Yes. Will I stick with it no matter what? Yes. Do I feel it's a good fundamental plan, and not just a knee-jerk reaction to current conditions? Yes.
 

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J4B, long time reader, big fan. for many years i have had an AA that looks very similar to yours. in recent years i began to really worry about currency debasement and that worry has not abated (lol). i view it as a risk in both deflationary (policy response) and inflationary environments. how are you thinking about this -- the gold and then equity making up 50% meant to suffice? i know that when i set my own AA, end of 100 year global sovereign debt cycle and debt jubilee (via debasement ) were not top of mind (perhaps a deficiency in my planning). i think these things are now more than tail risks on anything longer than a 1-2 year timeline (and possibly even in the short term) and the consequences severe enough that for me they justify revisiting the AA, moreso than other attempts at market timing. very interested to hear your thinking on this.
 

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It is my understanding that if I was to sell my gold today, I would be paying a 50% Capital Gains tax.
 
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