Royal Canadian Mint ETR premiums

In Canada you can directly invest in gold by buying (TSX: MNT), which currently represents 0.0105808 Troy ounces per unit (this goes down slowly to reflect the 0.35% MER).

Normally the trading price of this product is close to the net asset value, but presently there is a huge premium involved.

This second as this is being written, the NAV is $24.81 while the market value is $26.99.

This is an 8.8% premium above NAV, which is very expensive and more so than it has typically been, especially during and after the CoronaCrisis.

You can redeem for physical with 10,000 ETRs, which would be good for 105.808 troy ounces, or nearly 3.3 kilograms.

The redemption fee for this (assuming you receive 3 kilobars, and the remainder in gold maple leaf coins) is about US$2,500, plus shipping and insurance. This is roughly 1.3% of the whole purchase price.

One would intuitively think that the NAV premium would be restricted somewhat to the cost of delivery.

Because you can’t just deliver physical gold to MNT, the only method to equalize this arbitrage is for the Royal Mint to sell units of MNT to the public at a premium to NAV (skimming the difference).