Gold and Emerging Markets Move Investment Trusts

Gold price volatility has pressurised the discounts of several investment trusts, while strong appetite for emerging markets means discounts in the sector are at a minimum

Szymon Idzikowski 7 May, 2013 | 10:00AM
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The recent gold price volatility has put pressure on the discounts of investment trusts specialising in precious metals.

Experts believe the drop in price of gold bullion was primarily the result of selling in the futures market, given it was not accompanied by significant selling of physical gold—and concerns over Cyprus potentially selling from their vault didn’t help sentiment.

There are very few closed-end funds listed on the London Stock Exchange that invest purely in gold and precious metals producers. Golden Prospect Precious Metal (GPM) has seen its discount widen significantly over the last six months, so the bullion price fall exacerbated an existing trend. Altus Resource Capital (ARCL) has historically traded at a premium; this has narrowed by some 450 basis points compared with its six-month average (data as at 29 April). That said, the latter still trades above its three-year average.  Avarae Global Coins (AVR) is trading at a discount that is tighter than its three-year average but, like GPM, it has widened this year by some margin.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Aberdeen New Thai Ord408.13 GBX0.03Rating
Golden Prospect Precious Metal Ord46.00 GBX2.22Rating

About Author

Szymon Idzikowski

Szymon Idzikowski  is a closed-end fund analyst with Morningstar.