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Royal Canadian Mint - Canadian Gold Reserves Exchange-Traded Receipts (MNT)
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Sprott Physical Gold Trust (PHYS)
Q: I have a question about investing in physical gold. Can you please explain the differences between the MNT and PHYS? I noticed that MNT outperforms PHYS and it trades at a premium to NAV while PHYS trades at discount. The expense rates 0.35% vs. 0.41% seems to be close enough to justify the differences in performance and discount..?
5i Research Answer:
5-year return on PHYS is 13.66%. MNT is 14.8%. PHYS is massively larger. We are not sure here on the exact reason. MNT represents gold certificates and PHYS actual bullion. There are those in the gold sector that do not believe in the reliability of certificates and prefer only bullion. But this should mean weaker performance for MNT or at least a discount. That being said, the certificates do represent a direct beneficial interest in gold held at the Royal Canadian Mint. Both securities can be redeemed for gold, however MNT can also be redeemed monthly for cash, and this feature may be the cause of its premium.