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MNT now at 16% premium and hit another record all time high.

Ideally, the Mint should issue more units and fill more gold into the program. But to do that, they would need more physical gold from refiners.
 

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I think since you can technically exchange MNT for physical if you pay Loomis to drop it off, people are seeing MNT as on par with physical.

Whats the current premium on physical bullion right now ? If it’s higher than the MNT premium, I’d hazard to say MNT will go higher, isn’t physical currently in short supply ?

If physical gold really does explode in price due to low availability, then buying MNT and paying Loomis puts you ahead of RCM dealers for gold delivery......

You could argue, that special treatment to fulfill MNT obligations to receipt/unit holders is also worth yet another premium....

premiums on premiums..... gotta love it...


I currently have not sold my MNT but am seriously thinking about it. Is MNTs price rise/premium foreshadowing ?

Might be worth looking at your portfolio before COVID wrecks real havoc.....

Fascinating times I tell ya....
 

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I do think that the physical limitation on available bars is a factor here. But how long might that last?

I think since you can technically exchange MNT for physical if you pay Loomis to drop it off, people are seeing MNT as on par with physical.
. . .
If physical gold really does explode in price due to low availability, then buying MNT and paying Loomis puts you ahead of RCM dealers for gold delivery......
This is very interesting. Could a physical dealer in gold buy MNT and take delivery, therefore converting it to physical? If such things are in play, that would make MNT much like "spot gold" with similar premium to the rest of the physical market.

I don't know enough about these things. I have no idea if that's happening.

MNT has not always had a premium. When I was accumulating the units over the last few years, I generally was able to buy at a discount to NAV, at one point 1% discount.

So I would not count on there always being a premium. I think as long as gold remains "in favour" the premium may persist, but once gold again becomes out of favour / unpopular, this could easily turn into a discount.

I swapped a quarter of my MNT position for CGL.C but plan to hold onto the rest for now.
 

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By the way, here are 5 year annual returns according to Morningstar
MNT: 13.44%
ZSP: 11.50%
XIC: 3.40%

I continue to have the same opinion I originally had: stocks, bonds, and gold all have the potential to give good returns over time. We can never predict which will perform best in a given time period.
 

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Since MNT is selling at a premium to NAV, the better trade would be to exchange bullion for unit of MNT, and then sell the units on the open market. That way one could pocket the premium with minimal risk.
 

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Topo, I have considered claiming/converting $50,000 of MNT to bullion and paying Loomis to drop off my physical gold. My wife and I were just talking about this this week.

I have not had time to research the actual prices of physical gold vs spot. If physical gold is a 20% premium over MNT then there would be another gain to do this... theoretically you could repeatedly do this over and over capitalizing on the RCM ETR program.

I just updated my XLS file and it looks like MNT has a 18.7% premium right now..... this is very strange.

I just checked SGB.ca and it appears there is a 4.5% premium over spot to buy physical.....

So, to me this premium on MNT doesnt make sense... unless I am doing something wrong....

Or is it considered safe by most investors and thus just simply bought regardless of price ?
 

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Topo, I have considered claiming/converting $50,000 of MNT to bullion and paying Loomis to drop off my physical gold. My wife and I were just talking about this this week.
hfp75, the profitable trade is to be selling MNT on the stock market and buying bullion. Or, if feasible, giving bullion to the mint in exchange for units of MNT.

If physical gold is a 20% premium over MNT then there would be another gain to do this...
Yes, but my understanding is that at this time MNT is selling at a premium to physical gold.
 

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I have never sold a stock short, and I'm not going to start now.

But if I were feeling frisky, I would strongly look at a pair trade here. Sell MNT short and go long CGL.C. The premium seems to be there for the taking -- the only question is how long it might take.
 

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Fireseeker,

i think first a person needs to understand the premium...

I think its brand recognition / safety - RCM and I would bet there is a lot of MNT in rrsp/lira/pensions....

for raw cash accts you can buy physical. There is a liquidity advantage to mnt though that physical doesnt have..... So it might just be brand, security & liquidity...
 

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We're all just speculating about the premium and what's going on. I think markets can be dangerous when one doesn't know what's going on behind the scenes.

If you made such a pair trade, you could find yourself a year from now with MNT at a 30% premium to NAV and you'd be "in the hole" on what was supposed to be free money.

The last time precious metals were popular, the premium on CEF remained very high for a long time. Anyone who tried to arbitrage that to GLD and SLV (which were possible trades to make) would not have been very happy.
 

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So, to me this premium on MNT doesnt make sense... unless I am doing something wrong....
It's possible people are just purely buying it for return-chasing at the moment, without understanding the NAV. I have no idea what's going on with it.

The premium could exist for a good reason, or it just might be goofy investor behaviour. I would imagine that if exploiting the difference in prices was a risk free opportunity, that investment banks (including the many ETF desks in Canada) would already be taking advantage of it.

Here's another possible explanation: due to COVID and disruptions at the refiners, the Mint may be unable to actually acquire more physical gold right now (= shortage of physical). For them, adding more physical gold and issuing units would be the right thing to do, and would pocket free money for the Mint. They aren't doing it.

Why does the Mint not take advantage of the free money? Are they incompetent? I doubt it. Perhaps their gold ETR program has hit some maximum size due to this unexpected popularity?

Maybe some investors know the Mint's position, and have decided to plow money in it, since gold is actually in an up-trend anyway. They could be doing this knowing that the premium is likely to increase, so they are perhaps trading doubly on both the uptrend & premium expansion.

An investor with that kind of knowledge could even remain hedged on GLD (or whatever) and perhaps purely betting on the premium expansion, because that might be something they can predict by knowing the particulars of what's going on with the Mint and refiners.

Just trying to say, there could be something interesting going on that we aren't aware of.

It might be worth contacting the ETR program and asking why they are allowing such a large premium, and not issuing more units to pocket the free money being offered to them. Central Fund of Canada (before Sprott destroyed them) was very good at using situations like this to acquire more physical and issue units.
 

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My gold allocation used to be in the Canadian Gold Reserves exchange traded receipts (ETR) which trades as MNT (0.35% MER) on TSX.
I've just switched to the iShares Gold Bullion ETF CGL.C (0.55% MER) which also tracks the price of gold in Canadian dollars unhedged.

The reasons for the switch are the bigger bid/spread of MNT and it's trading at whopping 16% premium of the fund's NAV. Anyone buying MNT now is over-paying 16%.
I have concerns with MNT's tracking of gold and the higher daily volatility.

During market hours, you can see the premium or discount on the Mint's web site and looking under Investors: Net Asset Value:
Canadian Gold Reserves - Canadian Silver Reserves - Royal Canadian Mint | Réserve d'or canadienne - Réserve d'argent canadienne - Monnaie royale canadienne

Price of gold YTD: +21.50%
MNT YTD: +44.04% avg. volume: 55,410
CGL.C YTD: 21.03% avg. volume: 74,988

MNT premium: 16% avg. bid-ask spread: 0.48%
CGL.C premium: 0.49% avg. bid-ask spread: 0.37%

Clearly the remarkable YTD performance of MNT is due to its premium. Both CGL.C and MNT are backed by physical gold.

The iShares Bullion ETF gold is stored on a segregated basis in the vaults of The Bank of Nova Scotia.
In the case of MNT, The Royal Canadian Mint act as custodian of the gold bullion on behalf of the ETR Holders and holds the gold in its facilities.
It is convertable to physical gold, but subject to fees and a min redemption of 10,000 ETRs.

I don't see how the convertable to physical gold feature can explain the 16% premium.

If this was the case why KILO.B unhedged gold bullion with MER of 0.28% is also up "only" 21% matching CGL.C's performance?
KILO's custodian is Royal Canadian Mint. Same as MNT. It is convertable to physical gold with subject to fees and a minimum redemption amount, as per the fund’s prospectus: “Redemption requests for a Monthly Redemption must be for physical gold bullion in amount equal to at least the equivalent in value to 1,000 grams international bar or an integral multiple thereof, plus applicable expenses.

How do you hold your gold? If you are buying MNT what justifies the 16% premium you are currently paying?
 

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If you look under the Individual stocks section of this forum, you'll see there is a thread on MNT with some discussion of the premium.
 

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If you look under the Individual stocks section of this forum, you'll see there is a thread on MNT with some discussion of the premium.
Thanks. I am new to this forum. This was really interesting discussion in the thread on MNT on the premium, but I see that you are also puzzled about it.
I like the idea of contacting the fund and inquiring about the premium and why are they not issuing new units and buying more physical.

Unless other investors (institutions, pension funds) know something we don't know, there will be a mean reversion at some point and MNT will fall down close to its NAV.
Talk about market timing, MNT was down 3.26% yesterday, while gold was up 0.8% and CGL.G was up 0.82%. I am glad I've switched, but I will monitor the situation closely.
 

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Best be careful trying to invest in yellow metal...Kingold on the Nasdaq that holds bullion has been busted as a fraud...
83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper.

Not sure about MNT but why gamble?
 

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Best be careful trying to invest in yellow metal...Kingold on the Nasdaq that holds bullion has been busted as a fraud...
83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper.

Not sure about MNT but why gamble?
Kingold is a Chinese gold processor in the Hubei province, owned by an ex Chinese military guy. MNT are units issued by the Royal Canadian Mint, a domestic crown corp, with gold stored in Ottawa.

Like night and day. Why would you draw any connection between these?
 

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Kingold is a Nasdaq listed stock meeting its reporting requirements.There is risk of fraud inherent in these type of holdings no matter the implied legitimacy. Fake bullion has made the rounds in NA in the past.
 

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The premium seems to be coming down a bit. At one point it was as high as 16% but currently it's 10%.

It would be nice to get a swift plummet in gold prices to "flush out" this investor behaviour. The resulting pain from seeing the premium disappear should then burn MNT latecomers, hopefully teaching them a lesson.
 

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I am fortunate as I sold most of my MNT a few days back at a nice profit and moved into CGL.C as I saw a few others doing.... I'll take the free ~15% increase in gold holdings.....

I agree that a drop in the price of Gold would be a good lesson for many, despite that it was good for me.

I don't see that happening though with COVID numbers where they are in the states and fall coming in a few months and that naturally will allow COVID to be more virulent.

Not to change the topic, but at our house, we are adding to our dry goods inventory to strengthen our at home capacity....
 
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