Just noticed something interesting in the precious metals market. While gold and silver have been swinging wildly lately, some of the closed-end funds holding physical metals have traded at crazy discounts to their actual holdings. Take Sprott's physical gold and silver fund (CEF)—a $10 billion fund holding actual metal stored in Canada. Last week it was trading at a 9.5% discount to what the metal inside is actually worth. At its worst point, the discount hit 11.4%. So basically, you could buy a dollar's worth of gold and silver for 89 cents. Wild, right?

The fund normally trades at around a 4% discount, so this recent widening is pretty unusual and seems to track exactly with how crazy the volatility has gotten. This opens up some interesting possibilities for traders willing to get sophisticated with it. If you're into arbitraging opportunities, theoretically you could buy the fund shares while shorting the underlying metals in the same proportions—profit when they converge back. The fund's roughly 59% gold, 41% silver. The expense ratio is 0.48%, and it trades on NYSE Arca and Toronto Stock Exchange.

Now, the catch: arbitraging this isn't straightforward. You need to borrow shares, deal with transaction costs, and there's no guarantee the prices actually converge when or how you expect. These inefficiencies probably persist exactly because the practical difficulty makes it not worth it for most players. The discount could stay wide, or widen further.

But for regular investors just wanting to buy precious metals at a discount without getting into complex arbitraging strategies? A closed-end fund trading below NAV gives you extra upside if that discount eventually tightens. You get the metal exposure plus potential gains from the price gap closing—compared to just buying a regular ETF. Sprott's silver fund (PSLV) hit a 9.4% discount last week too, and the gold one (PHYS) was at 4.1%. Worth keeping an eye on if you think metals are undervalued right now and you're comfortable with the volatility.