February 8, 2021
Gold futures and ETFs are popping on Monday, after investors are swooping in to buy at perceived bargains following significant losses last week.
Gold futures and ETFs have been trending down since the beginning of the year, and the lustrous metal most recently dipped below the $1800 level to reach $1784.60, before recovering above that level on Friday. The move lower could present an opportunity for gold bulls, who have driven prices over 1.13% higher on Monday to reach $1840.60 an ounce on optimism that a bottom may be in place for the metal.
Yet, while the move has boosted gold ETFs like the
‘PSLV’ Still a Powerful Idea Today
PSLV is a closed-end fund that lets investors redeem large blocks of shares in exchange for delivery of silver bullion.
The Sprott Physical Silver Trust often trades at a premium to net asset value (NAV). Closed-end funds can see large premiums and discounts, while exchange traded funds (ETFs) have an arbitrage feature that tends to keep prices in line.
“Samuelson believes silver remains undervalued relative to gold by 10% to 30%. With gold in the $1,825 to $1,875 an ounce range, silver should be trading at $30 to $35, he says,” according to
Barron’s.
PSLV “offers a potential tax advantage for certain non-corporate U.S. investors. Gains realized on the sale of the Trust’s units can be taxed at a capital gains rate of 15%/20% versus the 28% collectibles rate applied to most precious metals ETFs, coins and bars,” adds Sprott.
As small cap equities continue to surge, investors may want to consider sprinkling in some gold with the Sprott Junior Gold Miners ETF (NYSEArca: SGDJ).