When originally launched two years ago, PHYS shares for a while traded at over 20% net asset value premium, making them initially unreasonably pricey compared to physical bullion (a major marketing angle is the ability to PHYS shares to be exchanged for the underlying gold bars with a large enough amount). As the GLD and PHYS performance has now largely converged, the current 2.5% net asset value premium is well worth the peace of mind, given that the physical bars are audited on a regular basis in a vault in Canada.
Silver Is Not a Perfect Alternative
While the Sprott organization also launched the
Sprott Physical Silver Trust
with similar characteristics allowing for the exchange of the shares for physical silver bars with a large enough amount, investors should not treat silver as an alternative to gold. Silver is predominately an industrial metal -- the same way platinum and palladium are -- and it tends to be weaker than gold in times of economic uncertainly. While U.S. economic data is notably improving, in Europe economic statistics have been deteriorating.
It is no wonder than silver topped out in late April 2011, just as the European situation notably got worse and has since not been able to recover all losses. The same goes for platinum and palladium. If you are looking to invest in precious metals as a hedge against central bank extreme monetary policies, stick with gold.