Ned Naylor-Leyland: Oppose takeover of CEF to prevent banks from raiding its gold


12:33p ET Friday, November 10, 2017

Dear Friend of GATA and Gold:

Old Mutual gold and silver fund manager Ned Naylor-Leyland today explains why he opposes Sprott Asset Management's long-running bid to acquire the Central Fund of Canada gold fund -- in part to keep CEF's gold from being raided by investment banks for covering their short positions.

Naylor-Leyland writes: "Over the course of the life of CEF, the stock has traded as low as a 17-percent discount to net asset value and as high as a 30-percent premium. Indeed, the fund has traded at a premium to its NAV for almost two-thirds of its lifespan. If CEF investors believe, as I do, that we are entering a new bull phase for gold prices (in U.S. dollar terms), then they would be giving up substantial future upside premium if they vote this transaction through.

"Those who have studied the bullion banking market in detail also know that banks have huge gold obligations against which they hold little physical bullion inventory. As such, if and when there is a run on gold obligations, banks could look to redeemable bullion vehicles as a way to make good on their bullion obligations. In principle this puts all types of redeemable bullion vehicle at risk of being redeemed were a run on unallocated gold to happen down the line."

Naylor-Leyland's commentary is headlined "Sprott Asset Management's Attempted Takeover of Central Fund of Canada" and it's posted at the Old Mutual internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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