The Gold Economy

Central Fund of Canada (CEF), a closed-end gold and silver mutual fund, has been considered an intelligent way to invest in gold and a better alternative to the ETFs by an analyst and the editor of Professional Timing Service, Curtis Hesler, according to a report prepared by Tyler McKee, a member of the Forbes Investor Team. Curtis Hesler bares his mind on CEF while giving his opinion and recommendation on gold investing at this time when gold had retreated from $1,900 an ounce to $1,600 just within a month and many gold investors are wondering whether gold is still a safe haven for wealth preservation.

While giving his thoughts on how to best play gold, Curtis observed that the factors that support increases in the price of gold and other precious metals haven’t really changed; Greece is still awful economically, many other nations within the Eurozone haven’t really changed their positions from being almost bankrupt, and central banks of many countries which includes Russia, China and India are still determined to increase their reserves in gold by thousands more while inflation ravages many countries with the purchasing powers of citizens dwindling and many national currencies losing their values in the marketplace.

Curtis says it is buying time for discerning gold investors because the price depreciation gold had just gone through was similar to the usual price corrections witnessed in the past and going through memory lane, Curtis observed that the present 16 per cent correction or $300 price loss is insignificant compared to the 660 per cent gain in price gold had achieved since it bottomed out in similar manner 10 years ago.

Finally, Curtis suggested that the Central Fund of Canada (CEF) was a better way to invest in gold than the ETFs such as the iShare Gold Trust (IAU) and the SPDR Gold Shares (GLD) because the CEF is actually backed by physical gold and silver while the ETFs are derivatives. Also, the Central Fund of Canada is a closed-end mutual fund and the physical gold is actually owned by the shareholders of the fund. An additional benefit is that shareholders of CEF get taxed differently and favorably when they opt to sell because CEFs are considered as equities while ETFs are considered as commodities and taxed at a higher rate.  Therefore, Curtis says if you are looking to take advantage of gold and silver profit takers, ‘’the way to go is to buy some units of Central Fund of Canada’’.

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