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  • Central GoldTrust Close To Historically High Discount [View article]
    In my article above I targeted a discount of 4.46% as the point at which to exit the transaction. Yesterday, GTU closed at $42.44 which was a discount of 4.42% against the net asset value. Using the closing prices from yesterday, the trade would have closed out with an overall profit of $84.03. The initial investment was $5.49 (see the spreadsheet above).
    The assumption that the net asset value of GLD would move perfectly in sync with the net asset value of GTU did not happen, and that is why the profit was not as much as the spreadsheet above anticipated. Nevertheless, this trade would have been nicely profitable for a holding period of one month.
    Here are the closing calculations:
    GTU: sell to close 239 shares x 42.44 less $7 commission = +10,136.16
    GLD: buy to close 86 shares x 116.74 plus $7 commission = -10,046.64
    Cash flow on the exit = 10,136.16 - 10,046.64=89.52
    Profit = 89.52 - 5.49 = 84.03
    Profit / Initital cash flow = 84.03/5.49 = 15.31x
    The above trades are hypothetical and assumes you were able to get in and out at the closing prices on the entry and exit dates, however, even if you couldn't do that, a trader could have approximated these numbers plus or minus.
    Dec 27, 2013. 09:48 AM | Likes Like |Link to Comment
  • Central GoldTrust Close To Historically High Discount [View article]
    The pairs trade I outlined is a bet that the discount will narrow at some future point. The market though can continue to be irrational and let the discount widen. If you look at the 5-year history you see some ridiculous premiums of 20% plus. That certainly didn't make any sense and let's say you did the reverse of this trade when the premium was 8%, if the premium than became 20%, you would have a losing position. As we all know, the market can move against you even when it does not seem to make sense. That is why you have to be very careful with the size of your position. Scaling into a position if the market moves against you is another option. While I am not an expert on NLY that might be a good example because the market seems to be moving aggressively against the stock more so than conditions warrant, even in the face of some heavy insider buying.
    Dec 1, 2013. 10:19 AM | 1 Like Like |Link to Comment
  • Central GoldTrust Close To Historically High Discount [View article]
    I think this is a good point. Thanks.
    Dec 1, 2013. 10:11 AM | 2 Likes Like |Link to Comment
  • Central GoldTrust Close To Historically High Discount [View article]
    The 1.54% discount is also a large discount. It is all because gold is so out of favor. I have done the pairs trade with PHYS and GLD in the past, trading both short/long and long/short. I flipped into GTU versus the PHYS given the bigger discount in GTU.
    Dec 1, 2013. 10:10 AM | Likes Like |Link to Comment
  • Central GoldTrust Close To Historically High Discount [View article]
    The NAV of GTU and the NAV of GLD are almost perfectly aligned. If you go to Morningstar and look at the YTD, 2012 and 2011 performance for the NAV of each fund, they are (GTU v GLD), -25.05 v -24.98; 5.22 v 5.26,11.20 v 11.20. So currency in not a factor. Also, GTU is traded in USD.
    Dec 1, 2013. 10:07 AM | Likes Like |Link to Comment
  • Renewable Energy Group Hitting All-Time Lows [View article]
    We are closing out our position in REGI. The stock is currently priced at $7.03, up about 35% from when we wrote about it in late July at $5.21.
    Mar 5, 2013. 09:34 AM | Likes Like |Link to Comment
  • Renewable Energy Group Hitting All-Time Lows [View article]
    REGI started falling hard on July 18th, I am assuming there were original investors who were in the Company for a long time and were waiting to exit the stock. It would make sense that those sales are contributing to the decline. How much of an impact? I don't know.
    Aug 1, 2012. 05:36 PM | Likes Like |Link to Comment
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