Precious metals have known a rebound for one month, but the bearish trend is still intact on a longer timescale. This week, fears about a Chinese slowdown have disconnected PGMs from gold and silver. Platinum and Palladium, which are used in the automotive industry, are falling down. Gold seems to have regained some value as a safe asset. On the other hand, the fundamental picture remains unclear: inflation stays low, production prices are not a safe way to estimate a bottom, and the concentration of future contracts by a few major players has not changed.
It is probably not yet the right time to buy gold as an investment, but there is no bad time to buy it as an insurance. Depending on your personal financial situation and current holdings, you might consider building a position in precious metals step by step. If you make such a decision, you have to know where you can find the best value for your money. The next table shows discounts, premiums, and real metal allocated for some Canadian funds on 1/23/14. They are an alternative to ETFs like GLD, SLV, PPLT, PALL.
Data: 1/23/2014 on close
% NAV in bullion*
Central Fund of Canada
99.2% (gold 57.6%, silver 41,6%)
Central Gold Trust
Sprott Physical Gold Trust
Sprott Physical Silver Trust
Sprott Physical Platinum & Palladium Trust
*complement is in certificates and cash assets.
For long-term buyers, CEF and GTU discounts provide a safety margin in case metal prices fall lower. An arbitrage, for example buying GTU and shorting GLD, is a low-risk trade, but don't expect a sure profit after carry costs: discounts in CEF and GTU have been moving randomly between 4% and 8% for two years.
As for Sprott funds, PSLV is selling at a premium, PHYS and SPPP are almost at the metal price.