Whether you’re a new or experienced precious metals investor, one of the first questions you’re likely to have when considering buying gold and silver is: Should I buy gold or silver? Well, I would suggest that you consider owning both. The purpose of this article is to show you how to do just that. First, a little history on the company:

Background

The Central Fund of Canada (NYSE Ticker: CEF) is a closed-end fund headquartered in Calgary, Alberta Canada that maintains 95% of their assets in gold and silver bullion. The remaining 5% is invested in cash.

The company has been around since 1961. One of the things I like most about Central Fund’s Gold and Silver Bullion, is that it is stored in the highest security rated treasury vaults at a Canadian chartered bank on an unencumbered, allocated, segregated and insured basis.

There is an annual Audit Committee who selects the outside auditors for the audit of Central Fund’s assets. The auditors are required to be independent as defined by the Canadian securities regulators. This simply means that the auditors can have no direct or indirect relationship that could be considered a conflict of interest. So, you’re actually buying gold and silver vs. a share of a trust as in the GLD ETF.

Purpose

From Central Fund’s website: “Central Fund’s purpose is to hold gold and silver bullion on a secure basis for the convenience of investors. That is short but direct and to the point.

Portfolio Breakdown

Another advantage of the fund is it’s transparency. As of December 2010, the portfolio breakdown was as follows:

Ounces Value/U.S. Dollars Gold Bullion 1,504,234 $2,076,595,528 Silver Bullion 75,209,103 $2,186,328,627 Cash and Other Net Assets 77,888,695 78,387,183 1.8 Total Net Assets $4,3 Billion

How to Purchase Shares

As previously mentioned, CEF is listed and trades under Symbol CEF and the Toronto Stock Exchange – Symbols: CEF.A. You can purchase shares of the fund just like you would any other stock.

Summary

While the Central Fund of Canada shouldn’t be considered a substitute for holding the physical metal in your hands, it’s the next best thing in my opinion. Additionally, whenever you want to sell any shares, all you have to do is go online to your discount broker and place a trade.

As with any investment, due diligence is recommended.