St. LOUIS (ResourceInvestor.com) -- After three years of trading on the Toronto Stock Exchange, Central Gold-Trust joined its sister the Central Fund of Canada on AMEX today under the symbol GTU. With gold up 2% for the week, the fund’s manager hopes to ride the positive sentiment in a new market.
“The Trust has achieved this significant milestone to broaden its market ability and will continue to soundly steward the assets entrusted to it by investors,” said Stefan Spicer, President and CEO of Central Gold-Trust, in a press release.
Central Gold-Trust [TSX:GTU.UN, GTU.U; AMEX:GTU] invests all of its assets in bars of gold bullion, with “the primary investment objective of achieving long-term appreciation in the value of its gold holdings,” according to the company.
A spokesperson for the Central Gold-Trust said the fund trades like an ETF, but is a closed fund like the Central Fund of Canada [TSX:CEF.A, CEF.U; AMEX:CEF].
Different from the traditional ETF or open-ended mutual fund, a closed-end fund limits its amount of shares, instead of creating and redeeming shares every time an investor buys and sells.
GTU raises capital through public offerings and private placements and immediately invests the proceeds according to its investment policy prior to striking a price for the shares to be issued from its treasury.
As of September 22, 2006, Central Gold-Trust has a total of C$81.1 million in assets with a market cap of C$79.8 million. The trust holds 94.5% in gold bullion, 3.7% in gold certificates and 1.8% in cash assets, totalling 122,907 ounces of gold bullion and equivalent certificates.
The Deed of Trust of GTU specifies that at least 90% of the assets are to be invested in pure, refined gold bullion. However, the policy of the Board of Trustees specifies that at least 95% of the assets shall be invested in gold at this time.
The gold is physically stored in the treasury vaults of a major Canadian bank. According to the company, the term “treasury vault” means that the vault has the highest security rating for treasury storage purposes and qualifies for storage by the bank of assets on behalf of the Bank of Canada.
The gold is audited annually and spot audited on at least one more occasion each year by bar number, refiner, weight and purity in the presence of a trustee or officer of Gold-Trust, at least one representative of the fund and two bank representatives.
Gold-Trust joins the Central Fund of Canada in the U.S., which is celebrating its 20th anniversary on AMEX this year. CEF invests primarily in gold and silver bullion and currently holds 680,026 ounces of gold and 33,995,514 ounces of silver with a total net asset value of C$880.3 million.
“We are pleased to bring a second precious metals investment listing to the American Stock Exchange,” added Spicer, who is also of president of the Central Fund of Canada.
Central Gold-Trust has selected Brendan E. Cryan and Company LLC as the specialist for the Trust, who is also the specialist for the Central Fund of Canada Limited.
Gold Price Activity
Gold for December delivery closed up $7.10 at $595.40 an ounce on the New York Mercantile Exchange.
It was the highest closing price since September 13, up 2.1% from last Friday's ending level. Prices jumped $12.20 in just the last three sessions.
GTU closed up 53 cents or 2.47% at $21.95 on its first day on AMEX.
