Merk Escalates Proxy Fight, Warns Saba BDC Conversion Could Cost ~$150M in Taxes
ASA sits 22% above its 52-week low of $43.2 on light trading volume (0.4× avg).
Summary
Axel Merk's latest proxy solicitation quantifies the tax cost of the Saba-backed BDC conversion at up to ~$150 million, or more than 10% of NAV, and urges shareholders to vote no and demand a tender at NAV.
Key Events · Corporate Governance and Compliance · ASA
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Merk Urges Vote Against BDC Conversion
Former adviser Axel Merk is soliciting votes against the Saba-controlled Board's plan to convert ASA from a gold fund into a private-credit BDC, and against the Board nominees.
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~$150M Tax Exposure Quantified
About $700 million of built-in gains at the 21% federal corporate rate implies roughly $150 million of tax; if a deferred tax liability is accrued at conversion, NAV could drop by more than 10%.
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Shareholder-Level Tax Warning
Holders without a timely QEF election face Section 1291 PFIC tax plus interest, and holders of $50,000+ of ASA face Section 367(b) deemed gain unless an all-E&P election is available — which requires historical E&P data.
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Discount Widened to 24%
ASA traded at a 24% discount to NAV on September 24, 2026, versus the -20.45% reported in Merk's September 11 solicitation; Merk wants a 100% tender at or near NAV before any conversion.
Analysis · ASA · Unknown
Axel Merk, ASA's former adviser and COO, is urging shareholders to vote against the Saba-controlled Board's plan to convert the gold fund into a private-credit BDC. What's new is a quantified tax argument: roughly $700 million of built-in gains at the 21% federal corporate rate implies about $150 million of tax exposure, and if a deferred tax liability is accrued at conversion, NAV could fall by more than 10% — a hit borne by every holder, including IRAs. He also flags shareholder-level PFIC and Section 367(b) consequences and notes the fund traded at a 24% discount to NAV on September 24, arguing holders should get a tender at or near NAV before any conversion. Because the definitive proxy/prospectus has not been filed, the vote outcome remains open; the size of the tax and discount claims makes this a live event for holders deciding how to vote.
How filings like this one have moved
In the 30 days to Oct 19, 2026, 29.4% of the 1386 measured filings Wiseek scored 7 moved their stock by 5% or more by the next session's close. The median move was -0.50%. These are measured outcomes after filings of this importance, not a forecast for this one.
Measured one observation per ticker per day, after exclusions. Current figures: Filing Impact Tracker · open dataset
At the time of this filing, ASA was trading at $52.52 on NYSE in the Unknown sector, with a market capitalization of approximately $961.9M. The 52-week trading range was $43.20 to $83.20. This filing was assessed with negative market sentiment and an importance score of 7 out of 10.