Hi I've been looking at the Gold prices and newgold and something just doesn't add up. Currently the gold price is at about R 13000.00 per an ounce and newgold is at about R126.00 per share. The newgold share is meant to track the price of gold by 1/100 of an ounce, meaning that the price should be nearer to R130 per share. Could you all please help correct me if I'm wrong ? Because this small difference would make a big difference with the warrants
New gold trades in it's own right. The discount represents the illiquid nature of this market (ie the South African gold ETF market) relative to international bullion market itself. As such - the discount must been seen as valid! When demand comes through, though, GLD often outperforms the gold price. Place your bid and benefit from the spread.
Keep in mind, though, that the warrants will trade their own market too. As such they will have their own spread. That said - the market maker will be able to match the GLD price on "in the money" stuff.
Not what I found. Same on the warrants! Had to contact them and they would apologise and correct the matter. Better than Investec who kept suffering from software issues. So you would leave them with a telephonic instruction and hear no more. They would call me a week later and say "your 10 000 AGL were met - so tell us when you want to do the trade and we'll suspend the market for you." That can be a bit concerning if you have cleared the position in the interim.
The GLD price started out as being 1/100th of an ounce, but because ABSA is paying a custodian to keep the gold safe as well as manages the fund they help themselves to some of the gold, so every year the reference quantity of actual gold decreases by about 0.4%. That's why the price is lower than 1/100th of an ounce.