Will Central Fund of Canada Be Golden in 2013?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Central Fund of Canada (NYSEMKT: CEF  ) . The closed-end fund posted modest gains in 2012 as the bull market in gold and silver bullion continued, but some aren't so certain about the prospects for precious metals this year. Read on for more about Central Fund of Canada's prospects for 2013.

Stats on Central Fund of Canada

Median Estimate for 2013 Gold Price, Bloomberg


Median Estimate for 2013 Silver Price, Bloomberg


Current Asset Allocation of Central Fund

54.3% gold, 44.9% silver, 0.8% cash

Sources: Bloomberg, Central Fund website.

Will Central Fund keep climbing in 2013?
Based on median estimates for bullion prices this year, Central Fund has a lot of room to run higher. Bullish estimates point to gains of more than 15% for gold and more than 30% for silver, which would lead to a boost in Central Fund's net asset value of 20% or more.

From a fundamental standpoint, many of the positive forces that have pushed gold and silver prices higher over the past decade are still in place. The Federal Reserve is still pushing hard to try to stimulate the economy through easy monetary policy, and all-in cash costs of production and management have been steadily rising, with Goldcorp (NYSE: GG  ) planning to release figures that Motley Fool gold expert Christopher Barker sees coming in near $1,100 per gold ounce.

Moreover, many of those factors support the idea that bullion will continue to be kinder to investors than gold mining stocks. With Kinross Gold (NYSE: KGC  ) and AuRico Gold (NYSE: AUQ  ) both having suffered declines in the past year with mistakes from management that led to ill-advised moves, especially in a rising-cost environment, the advantage of Central Fund is that you don't have to worry about company-specific issues ruining an otherwise sound investment.

The fiscal cliff resolution also favors Central Fund going forward. Low rates on capital gains will continue to give the closed-end fund a tax advantage over SPDR Gold and iShares Silver (NYSEMKT: SLV  ) for certain investors, with only upper-end taxpayers seeing any increase in tax rates at all.

Central Fund's mix of gold and silver gives investors exposure both to the safe-haven status of gold and the industrial applications of silver for a growing economy. With shares currently at a typical premium of 5%, investors can use Central Fund as a reasonable proxy for precious-metals exposure.

Find smart stocks
No matter what sector you like to invest in, it's always smart to find innovators in an industry. That's how Motley Fool co-founder David Gardner has frequently crushed the market, as his picks reveal his insight on popular trends before they actually become popular. Learn more on how David discovers his winners by clicking here and getting exclusive access to your personal tour of David's Supernova service. It's not available forever, so act now.

Click here to add Central Fund of Canada to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2192754, ~/Articles/ArticleHandler.aspx, 10/7/2015 12:10:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated Moments ago Sponsored by:
DOW 16,810.70 20.51 0.12%
S&P 500 1,985.49 5.57 0.28%
NASD 4,750.01 1.65 0.03%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/7/2015 11:53 AM
CEF $11.18 Up +0.02 +0.18%
Central Fund of Ca… CAPS Rating: ***
AUQ $0.00 Down +0.00 +0.00%
AuRico Gold Inc. CAPS Rating: ***
GG $13.73 Down -0.01 -0.07%
Goldcorp, Inc. (US… CAPS Rating: ***
GLD $109.83 Down -0.03 -0.03%
SPDR Gold Trust (E… CAPS Rating: **
KGC $2.13 Down -0.02 -0.93%
Kinross Gold Corp… CAPS Rating: ***
SLV $15.24 Up +0.17 +1.09%
iShares Silver Tru… CAPS Rating: ***