Bargain spotted in gold closed-end funds

|By:, SA News Editor

If you have to own gold, Central Fund of Canada (CEF +0.6%) is the way to go, writes Morningstar's Mike Taggart, who notes it's trading at an 8.3% discount to NAV - more than two standard deviations outside the norm. As CEF holds just gold and silver bullion (55/45 mix), the big discount suggests a great deal of bearish investor sentiment is priced in.

"There is no fundamental reason for the share price to have fallen significantly faster than its NAV," writes Taggart, and the fund gets a Bronze Morningstar rating - meaning it's expected to outperform all other funds in the commodity precious metals category over the next five years.

Central GoldTrust (GTU -0.6%) also makes the undervalued list.

Gold ETFs: GLD, IAU, SGOL, PHYS, AGOL, DGL, UBG, DGP, UGL, DZZ, GLL, DGZ, UGLD, DGLD, GLDI.