Hi Rien,
You adressed every item in my post except one, that being the discount/premium which is the most important one.
In 1986 despite the 20 year bear market gold spiked to $500 an ounce. You could have bought CEF at a discount at that time. It was after the spike when gold was once again declining in price that CEF was selling at a premium. It is not unusual for investors to run the price up at the premium level at the wrong time. When a fund has been selling at a discount for 200 of the last 240 months ( that is an approximation from the chart) it is foolhardy to jump in and buy it when it is at a premium.

How the fund rebalances its holdings is irrelevant to the discount/premium.

Taxes that have to be paid are irrelevant to the discount/premium.

The risk of holding gold has nothing to do with discount/premium.

When you purchase anything at a premium price you are paying more than it is worth.
Bernie

Hi Rien,
According to my research it is 59% gold, 39% silver, and a little over 2% cash.
Interesting, about the tax on silver in Germany. Is the tax charged on purchases of silver or sales?
Regarding CEF's NAV: The major importance of any CEF's NAV is in the calculation of the discount/premium. The only time you definitely buy a CEF at the actual NAV is by buying it before it is offered on the exchange. Once it has gone public it will usually will sell at a discount or premium.
Right now CEF is selling at a 10% premium.
If you examine the 20 year chart from September of '83 to the present, it is very obvious that the overwhelming majority of the time CEF was trading at a discount.
The NAV is calculated for CEF very simply. They take the number of ounces of Gold that they own times the price of gold per ounce. They take the number of ounces of silver that they own times the price of silver per ounce. Then they add both prices together plus the cash on hand. That amount is divided by the total number of shares to get the NAV. There is no judgement involved in calculating NAV. It is done by using nothing more than 5th or 6th grade math.
I mentioned gold and not silver in my post because you and 2mc were discussing gold as a substitute for cash.Here are annual comparisons of NAV and market returns for CEF.
Annual Returns
1999 2000 2001 2002 YTD
Mkt Return 22.1 -23.9 4.8 43.6 1.47
Nav Return 2.6 -10.7 -0.8 13.2 8.91
It is easily discernible that the market price has much wilder swings than the NAV. While this might make CEF a viable AIM holding, it would be totally unsuitable as a substitute for the Cash portion of an AIM program.
Bernie

Gee! All I did was copy and paste a statement that you made about your actions.
Bernie

Hi,
You wrote:Throughout my life, the majority of my ideas have been idiotic and stupid.
Paying a 10% premium for an asset that you intend to use instead of cash certainly fits in the above category.
Bernie

Hi,
In the past year CEF has two price drops of more than 20%. How can you call CEF a safe haven and a substitute for cash?
Right now CEF is selling at a 10% premium. Today's purchasers will be paying an extra $40 for each ounce of gold they buy.
You should realize that you are buying real assets, not stock symbols.
Bernie

Hi Linda,
500% eom
Bernie

Hi Linda,
Here's the current poop on ACG
As of 8/31/2003
Net Asset Value Per Share $8.14
Share Price $8.07
Premium/Discount .0009
Dividend Per Share (As of 9/3/2003) $0.0675
Current Div. Yield (on share price) 10%
Discount to NAV is less than 1/100 of 1%. This is not near enough discount to make it a buy yet. When you can buy ACG at somewheres near a 10% discount to NAV, not only will you get a higher yield, it will have most of the risk removed and price will almost certainly go higher.
In order to calculate the yield you have to multiply the dividend by 12 since it is paid monthly.
.0675*12 =81 cents annual dividend. 81 cents divided by $8.07 is 10%, not 8.088%

I will leave the prognostications as to where the market price will go to others. The important thing to consider is what you're getting and how much you're paying for it.
Quick question Linda: 2 packages of eggs at the supermarket.
One says that it contains one dozen and costs $1. The other says that it contains 1 1/2 dozen (18) and costs $1.25. You look inside the larger package and notice that there are only 13 eggs inside not 18. Which package represents the better value? You must remember that when purchasing a CEF like ACG what you are buying are bonds that have a very definite price.
There has been some discussion here lately about CEF a closed fund that buys Gold and Silver. These are commodities that have a definite price. Gold is currently at about $386.40 per ounce. If you buy CEF today you're paying $421 for an ounce of Gold since it is selling at over a 9% premium. How smart is that???
Bernie

Hi Steve,
I may have oversimplified the problem, but I found very few advantages to LIFO It appears to me that what you are doing is identifying specific lots for buying and selling. It can be done fairly easily with both MS Money Quicken. This has always seemed to me to be an extremely complicated method which I never attempted because of the complexity.
I use FIFO which is very simple to set up with Excel and appears to work well with AIM as profits on transactions are concerned. I also find it beneficial as far as taxes are concerned although I haven't yet analyzed what the new tax cut's affect will be.
If there is something wrong with FIFO I would be interested in hearing it.
I don't know if you are familiar with Occam's Razor or not, but it is a maxim that says that sometimes the simplest solution to a problem is the best one.
Bernie

Hi,
I will not be upset if you don't answer this question, but I will ask it anyway.
Approximately how many dollars is represented in a 1% trade, and what percentage do investment costs such as brokerage fees and taxes represent of that amount?
Bernie

Hi Bruce,
We spend lots of time in Santa Fe. Just yesterday I downloaded the opera schedule for next year.
It's a pleasant one day trip from here throught some beautiful country. Sometimes the trip gets a little long as we have to stop to take pictures. This weekend we're taking our Fall trip. We'll be heading West and North. Interesting spot called Dinosaur National Monument. The wife and I are taking a course at the college here. Figure we might get some extra credit.

Did you get to Taos while you were in Santa Fe?
Bernie

Hi Bruce,
Here in Gunnison we are bouncing up against $2.00 a gallon. Haven't quite crossed over yet..
Bernie

Hi Rien,
TDF is up a nice 4.71% today. I'm sure the other Chinese holdings are doing nicely as well.
Bernie

Hi Linda,
Congrats on the action with LOUD.
Bernie

How much did you pay for it?
Bernie

Hi Bruce,
You wrote: something is making my brain move slower!
It's a reflex action that is activated by the high gasoline prices! Your brain is trying to extend the time between fillups.
Bernie

Hi Steve,
You've got a memory like an iron fist!
Bernie

Good Morning Keith,
It sounds like you're on the right track. If you want to reduce your TKLC stock holding by $10,000 all you have to do is sell $10,000 worth of TKLC shares. Then you would Decrease shares in Newport. Newport will reduce your Portfolio Control automatically. You would just have to decide how much cash to remove from your Cash reserve. Removing cash will have no effect on the buy/sell range for Newport, just on the buy capability for you.
Bernie

P.S. It's a shame Bob Norman is no longer supporting Newport adequately. AI is a nice program but I really prefer Newport for it's ability to perform AIM as Mr. L described it in his book.

I guess you didn't read all of Jack's post. Maybe I was mistaken when I replied to Jack's post. I was under the impression that Jack was asking about a specific type of transaction performed with a specific software program called Newport.
Of course you are correct. Anyone can take any amount of money out of their account anytime they feel like doing it. they can spend their money any way they want to.
I congratulate you on making money in the market between 1992 and 2000. Join the club. It's a very large club, I don't know anyone who didn't make money between 1992 and 2000.
The fact that you didn't do it as well as Warren Buffet is irrelevant. Your post to Jack however is also irrelevant to his question about how to perform a transaction in Newport.
Bernie

Hi Jack,
That is absolutely correct!
Bernie

Hi Tom,
You wrote:The Maintenance window is used only to designate stock splits (or reverse splits) and mutual fund distributions that have been reinvested.
Just for clarity I would like to add that the Maintenance window is also used for reinvested stock dividends.
Bernie

What are the other asian stocks you own?
Bernie

Hi,
Just had another truck pull up to the warehouse.
I've been running a little mini-fund composed of some shares of HR,HRP, and a really small amount of FVE which was spun off from HRP a short while ago. It was nice to see the shares leave. since it's inception 3 years ago the fund has shown a nice profit of 48%. We didn't start reinvesting the dividends until February of '01.
For all of you that have followed the saga of TDF. It's down quite a bit yesterday and today. Don't understand what's happening the asian market seemed to have had good results as of this morning. Perhaps we can get it down to a nice discount again when it will be time to buy some more. Here's to $10.24! Thank goodness for the creep! I sure am glad I don't have to wait for it to hit 8.63 again.
Bernie

Hi Linda,
I have a friend who works for a large gambling casino in the U.S. that has opened casinos in New Zealand and Australia as an auditor. She had been telling me about the booming economy in Australia. wanted me to go out there and start a business with her. I passed on that. I did some reading that seemed to confirm her ideas about the Australian economy and decided to dip my toe in the water. The past 18 months' performance of IAF seems to be proving her correct.
Bernie

Hi Patrick,
As they say "the devil is in the details". Here's a quote from World Factbook http://www.odci.gov/cia/publications/factbook/geos/hk.html Occupied by the UK in 1841, Hong Kong was formally ceded by China the following year; various adjacent lands were added later in the 19th century. Pursuant to an agreement signed by China and the UK on 19 December 1984, Hong Kong became the Hong Kong Special Administrative Region (SAR) of China on 1 July 1997. In this agreement, China has promised that, under its "one country, two systems" formula, China's socialist economic system will not be imposed on Hong Kong and that Hong Kong will enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years." The significant words for me are underlined.
Bernie

Hi Linda,
What made you think Newport wouldn't run on XP? I'm curious. XP can duplicate previous Windows operating systems if programs can't take advantage of XP.
The only thing I own that doesn't like XP is my HP film scanner. I think that's more HP's problem than it is XP. The people there are not too bright IMO.
I had some extra $$ back in March of '02 and decided that it was time to start diversifying into some other countries besides the U.S. I feel that CEFs are the way to go for foreign investing. The first one to strike my fancy was IAF. I appeared to have bottomed out at around $5.90 and more importantly it was selling at about 16% discount.
What's really nice is the fact that the price has appreciated by about 24% but it is still selling at about a 12% discount. In other words, if you buy IAF today at $7.32 (current price) you will be getting $8.19 worth of Australian stocks. BTW IAF is 100% invested in Australia. I guess people don't know too much about the Australian market and stay away from it. It is certainly not a high volume stock. For example at the present time there have been 46,300 shares of TDF traded and only 900 of IAF. I haven't started AIMing IAF as it represents a very small part of our portfolio. I have been thinking about adding to the position and starting an AIM program but we had some unexpected expenses this summer. #1 We had to put a new roof on our business rental property in town. #2 We finally decided to put an automatic sprinkler system in at the house. Those two things depleted our savings by about $11,000. If the discount on IAF holds up I will certainly be adding more to my position as funds become available.
Bernie

That's funny!

Hi Linda,
I'm using XP Professional which I believe is the latest Windows, and Newport runs just fine.
Bernie

Hi TF,
You wrote:Well I guess Hong Kong IS part of China Now
I agree with that statement. That's why I chose TDF as my China fund. Their Chinese holdings have been as high as 80% recently. At the present time China and Hong Kong combined at practically at 80%. Here is their allocation as well as a list of their top holdings.

Taiwan
15.80%
China
36.20%
Hong Kong
42.30%
TOP 10 HOLDINGS
As of 6/30/2003
DAIRY FARM INTERNATIONAL HOLDINGS LTD
Dollar Value: N/A
% of Total Portfolio: 11.4%
CHINA PETROLEUM & CHEMICAL CORP
Dollar Value: N/A
% of Total Portfolio: 8.1%
CHEUNG KONG INFRASTRUCTURE HOLDINGS LTD
Dollar Value: N/A
% of Total Portfolio: 4.9%
CHINA MERCHANTS HOLDINGS INTL CO LTD
Dollar Value: N/A
% of Total Portfolio: 4.6%
HANG LUNG GROUP LTD
Dollar Value: N/A
% of Total Portfolio: 3.8%
PETROCHINA CO LTD
Dollar Value: N/A
% of Total Portfolio: 3.4%
BEIJING DATANG POWER GENERATION CO LTD
Dollar Value: N/A
% of Total Portfolio: 3.2%
CHINA MOBILE (HONG KONG) LT
Dollar Value: N/A
% of Total Portfolio: 3.2%
HONG KONG & SHANGHAI HOTELS LTD
Dollar Value: N/A
% of Total Portfolio: 2.9%
CITIC PACIFIC LTD
Dollar Value: N/A
% of Total Portfolio: 2.7%

TDFs discount/premium history has been much more favorable to investors than CHN.
Bernie

Hi,
Where's China?
United States
18.11%

Taiwan
29.20%

Hong Kong
46.63%
It looks like your CHN has 94% of its assets in countries other than China
Bernie

Hi Linda,
I'm not sure I am the best person to be answering your question.
I really don't vary too much from what is in the book.
I don't believe that GTC orders would be opposed by Mr. L. They have nothing to do with AIM other than being an efficient method of executing an order at a specific price.
I do use GTC orders no more than once a month.
I have recently switched to 80/20 stock/cash for new AIM programs that I start.
I have always used 10/10 buy/sell safes for stocks and follow Tom's lead with 0/10 for regular Mutual Funds and most ETFs.
The only "tweaking" I am unsure about is the minimum transaction size. Which is shown in my confusion about whether to use 5% or 10%. I think 15% or 20% would be too large not providing enough trading.
In reexamining TDF's chart with the addition of Williams %R and Bollinger Bands I have come to the conclusion that 10% is the right place to be with TDF.
William's %R and Bollinger Bands are the only two technical indicators that I have any faith in.
Bernie

Here's the latest country allocation for TDF
Taiwan
15.80%

China
36.20%

Hong Kong
42.30%
Bernie

Hi Steve,
You wrote:I think that is what a PC reset might do, in effect, without selling any extra shares, or executing a 'cleansing order' as Tom suggests
That's getting into virtual PC.
Just my opinion but you're starting off by telling AIM you are buying more shares than you really are.
Now you want to tell AIM another fib by fooling it into thinking you're selling shares you really aren't. IMO this is not a good basis for any relationship.

Bernie

Hi Linda,
You are probably right, although I don't think logic has anything to do with it. Sometimes I think we confuse greed and fear with logic.
One of the things I think most important in investing is to find a discipline that works for you and stick with it. I guess I will have to start doing that myself.
Bernie

Hi, you wrote:"Once in a generation" disasters for some have proven to be
"Once in a generation" opportunities for others.
Who said that?
Bernie

Hi Steve,
How about Removing Shares when you start being concerned about the creep affect? Just sell some shares, reduce PC and use the funds to start a new LD-AIM.
Bernie

Hi Linda,
I'm using 10/10 for my safes. There would be no way to tell in advance that the stock was going to behave as it has. Enlarging the safe range could just as easily given me no action at all. I'm not the least bit unhappy with the situation, just a little confused. I was expecting to have this as a problem so soon.
Bernie

Hi Steve,
Very interesting!
You wrote:how realistic is a 60% drop (10.00 to 4.00) in 3 months, with a corresponding 150% recovery (4.00 back to 10.00) in the next 3? Not very IMHO.
I have always been curious as to why everyone looks at Lichello's hypothetical example and nobody ever mentions his real life examples. There had to have been at least 7 of them.
Bernie

Hi Pete,
For the reasons you mentioned, most folks would not recommend GTC buy orders. All too often they would execute while the price continues to dive.
On the other hand the old saw is you'll never go broke by taking a profit.
Bernie

Hi Steve,
You wrote:we're discussing how his original algorithm works (or not) with respect to using it in a GTC environment, with smaller, more frequent transactions.
Smaller more frequent are the keys with GTC. I don't like to do more than one sell a week. Actually I prefer limiting the sales to about one a month. What I will do after a GTC sale is place another GTC at a higher price than the next minimum price.
Let's say then next minimum GTC sale would be for 27 shares. I may check out what price would give me a sale for 30 or 40 shares. It won't trip very often, but it is a nice bonus when it does. If a month goes by and it doesn't trip but passes the minimum order price then I will cancel the GTC order and sell as AIM directs.
Bernie

Hi Steve,
What you wrote is interesting, but I think you are missing one very important point. You wrote: I can't help feeling that there is something fundamentally incorrect in the algorithm that would allow the price to rise after cyclic (Buy,Sell) transactions.
I don't think there can be anything in the algorithm that allows the price to do anything. AIM is reactive, reacting to the price rather than having anything causative to do with the price movement in any direction.
Bernie