CEF
The Best of The Best
Peter Degraaf
Mar 18, 2009
"Among the Gold and
Silver ETFs there is one that is superior to all the rest."
Early on March 17th Max Hulbert
reported that his Gold Newsletter Sentiment Index (which tracks
leading gold advisories), had dipped into negative territory.
Three weeks earlier this same
index had shown gold analysts to be in a bullish mode by 61%,
and now some 15 trading days later, these same analysts are 16.5
bearish, and advising their clients to be short gold for the
time being.
For contrarians this is good
news, and indicates that a buying opportunity in gold is likely
on the horizon. As a rule, gold analysts are most bullish near
a top and most bearish near a bottom. What say the charts?
Featured is the weekly gold
chart. The blue arrows point to bottoms in the 7-8 week gold
cycle. Three out of the last cycles lasted just 6 weeks. The
latest cycle appears to have bottomed right on schedule, during
week number eight. Confirmation that the bottom is 'in' will
come once price closes above the green arrow. The overall trend
is up, and the supporting indicators (RSI and MACD) are both
positive. A closing price above the green arrow will start the
next rally towards the resistance at 1,000.00.
Historically gold almost always
puts in a bottom in mid March (THAT'S NOW).
***
Featured is the weekly silver
chart. Price bottomed in October and rose by 75% to 14.75.
The Fibonacci target for the
pullback has been met at the blue arrow. The supporting indicators
are positive (green lines). As soon as price rises above the
50WMA (blue line), the next target is at the green arrow.
Historically silver almost
always puts in a bottom in late February or early March.
***
So now that you are ready to
buy into a gold or silver ETF, why not go for the best of the
best? CENTRAL FUND OF CANADA is not called an ETF, but it performs
the same function. Founded in 1961, (long before the modern ETFs),
CEF operates under the laws of the Province of Alberta Canada.
The founder is its current
chairman, Mr. Philip M. Spicer. The company issues shares from
time to time at prices that are non-dilutive to its existing
owner's net asset value per share, and it always buys additional
gold and silver bullion prior to striking a price with the subscribers
to its offerings. The company invests in gold and silver and
its bullion holdings are always stored on an unencumbered, allocated,
segregated and insured basis within a Canadian chartered bank's
treasury vault storage facilities. The physical gold and silver
bullion is audited on a semi-annual basis in the presence of
Ernst & Young LLP, the company's auditors. This auditing
factor puts Central Fund head and shoulders above the gold ETFs
that have become so popular during the past few years.
The company's shares qualify
for inclusion in many North American regulated accounts.
Annual expenses are below 0.45%
(low for this type of company). These expenses are taken from
the company's cash position. If the company does not have an
adequate amount of cash on hand to meet its commitments, a small
portion of its holdings may be sold to raise the cash required.
The company has not sold any of its bullion holdings for several
years and it has enough cash on hand to meet its current level
of expenses for several years!
A minimum of 90% of Central's
assets are tied up in gold and silver at all times.
Central Fund never leases any
of its gold and silver, and for those who worry about a repeat
of the 1933 US government gold grab, the fact that this gold
is outside of US jurisdiction puts that fear to flight.
Whereas several articles have
been published that detail possible risk involved in the investing
in GLD and SLV, no such risk exists with Central Fund.
The chairman recently issued
this statement: "Our bullion is stored in separate compartments
within the bank, with the name of the owner clearly indicated
on the compartment, and on top of each pallet of bullion the
name of the owner is indicated. This prevents the bank from using
the asset for any unauthorized purpose. We also pay Lloyds of
London for coverage of any possible loss".
Daily volume in CEF ranges
between 500,000 and 1 million shares. For CEF/A.TO the average
is between 100,000 and 200,000 shares per day.
Central Fund updates its financial
situation on a daily basis at its website www.centralfund.com
As of March 16th these assets consisted of 1,049,328 ounces of
gold (56.9% of total), and 52,460,793 ounces of silver (40.4%).
The balance is ties up in cash and other assets. Current market
cap is 1.9 billion dollars US - 2.4 billion dollars CDN.
The activities of Central Fund
are controlled by a board of directors consisting of people who
are knowledgeable in the precious metals field, and all of whom
are current shareholders.
To the best of my knowledge
CEF qualifies for 401K and CEF/A.TO for RSP investment purposes
(but check with your accountant to make sure).
For additional information
contact the company at info@centralfund.com
Featured is the CEF daily chart.
Price is rising within a well defined channel. Volume been dropping
during the latest pull-back (red and green arrows), a positive
sign.
The supporting indicators are
at support levels (green lines). A breakout at the blue arrow
will start the next bullish rally.
Peter Degraaf
Peter Degraaf is an online stock
trader with over 50 years of investing experience. He issues
a weekly report for his many subscribers. For a recent copy or
for a 60 day free trial just send him an E-mail at itiswell@cogeco.net or visit his website
www.pdegraaf.com
Disclaimer: Please do your own
due diligence. I am NOT responsible for your trading decisions.
321gold Ltd
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