Owning gold has been a good idea for thousands of years. But it is never a good idea to overpay. Today, gold miners appear relatively inexpensive compared to physical gold. So the first discount is to use fresh capital to buy miners instead of metal.
The second discount is the get those miners at a discount via ASA Gold & Precious Metals Limited (ASA). ASA trades at an 11% discount to its net asset value. It is a closed-end fund invested in the exploration, mining, and processing of gold and other metals.
Shareholder activist Boaz Weinstein has been working effectively to unlock these NAV discounts. He is trying to expand the ASA board and upgrade it with an independent director.
My CEF pick of the month is ASA, at an 11% discount to NAV. Saba continues to build serious momentum to close NAV discounts. Today’s win at MCT shows what’s possible when shareholders push back. ASA could be next.
- Boaz Weinstein
Caveat
The board and management are hostile to shareholders, adopting a poison pill to entrench themselves and complicating the process of unlocking value. This is an especially cynical move as their previous one was illegal. While fighting Weinstein, they’ve been tepid about buying back shares. I am not your tax advisor but be aware of the impact of its Passive Foreign Investment Company (PFIC) classification for U.S. federal income tax purposes. PFICs are a PITA.
Conclusion
All closed-end fund investors benefit from Boaz’ work to improve this overcompensated and underperforming backwater of the financial world.
TL; DR
Consider buying ASA, especially if you aren’t a U.S. federal income taxpayer.