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Eric Sprott To Buy $235 Million In Gold, Or Over 6 Metric Tonnes, As Part Of PHYS Follow-On Offering

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Tue, 05/25/2010 - 17:51 | 372998 Turd Ferguson
Turd Ferguson's picture

This is great news!!!

Should help eliminate some of the premium to NAV, too, that was keeping some investors out.

Tue, 05/25/2010 - 18:16 | 373060 Captain Obviousness
Captain Obviousness's picture

Possibly, but that depends what the NAV premium is caused by.  CEF also generally carries a significant NAV premium which temporarily evaporates when they issue new shares.  But PHYS claims to get regular capital gains tax treatment, unlike the higher "collectible" rate you have to pay in other precious metal ETF's.  I think most of the NAV premium in PHYS is due to perceived tax advantages, not due to perceived safety.  The US gov will eliminate any legitimate tax advantages PHYS currently has.  Can't let transactions in gold be too cheap, you know.

Tue, 05/25/2010 - 19:21 | 373194 Cistercian
Cistercian's picture

 Sprott is chock full of WIN.The real comedy is that the more WIN he has, the more likely the ponzi FAIL.And an epic fail it will be.

Tue, 05/25/2010 - 23:12 | 373518 akak
akak's picture


It may soothe the ego and stroke one's sense of superiority to casually and flippantly bandy about obscure acronyms, but we mere mortals would be interested in following the conversation as well.

Wed, 05/26/2010 - 10:44 | 374122 Temporalist
Temporalist's picture

I think he meant WIN as in WIN not W.I.N.

Like Sprott PWNED...

Tue, 05/25/2010 - 18:06 | 373013 jmf
jmf's picture

Moin from Germany,

add "The Gold Rush In China"  to the physical bullion mix......


Must see clip!!

Tue, 05/25/2010 - 18:26 | 373096 ZerOhead
ZerOhead's picture

Yup... must see clip. The party is starting... feel the energy... feel the fear.

Soros of course is correct... gold will become a bubble... but it sure ain't yet!

Tue, 05/25/2010 - 18:58 | 373166 Rusty_Shackleford
Rusty_Shackleford's picture

Yeah, you gotta' love that line (as he was buying hand over fist).

Tue, 05/25/2010 - 23:51 | 373588 Slewburger
Slewburger's picture

Watched Roubini on Bill Maher's show (ashamed), he was advocating spam investment instead of gold.

Maher called it antiquated. Of course the crowd laughs when the signs light up on queue.

Maher's show is filmed in NBC studios, looks like Immelts propaganda machine is running almost as fast as Uncle Bennie's press.

No bubble for us yet, but the Chinese will be laughing when the music stops and they're already sitting in their chairs.

Wed, 05/26/2010 - 00:23 | 373649 drwells
drwells's picture

I remember a few years ago some mainstream financial analyst was recommending that you fill your garage with Plasma TVs rather than gold. I loved the fact that the asshole even managed to pick the one of the few things that actually manages to depreciate faster than green toilet paper.

Wed, 05/26/2010 - 10:42 | 374117 Temporalist
Temporalist's picture

I have been a fan of Maher's for a while.  He is an "entertainer" so I take everything he says with a grain of salt.  The guests he has are worth listening to usually...when he lets them speak.

Tue, 05/25/2010 - 19:52 | 373231 Rebel
Rebel's picture

Watched the clip . . . looked like a big gold shop in a mall. Can you imagine whipping out your cash in that crowded store, getting your 1 Kg (2.2 lb) bar, and walking out with it, back through the mall and out to your car. Chances of making it home alive in US?

Tue, 05/25/2010 - 20:11 | 373263 Mesquite
Mesquite's picture

At the 800+ peak, years ago, that was going on in Vancouver, Canada...(Lined up around the block to get in, even..)

Tue, 05/25/2010 - 17:58 | 373021 Cognitive Dissonance
Cognitive Dissonance's picture

"Somehow, we don't think the LBMA will be too thrilled with this extraction of physical gold out of the controlled synthetic precious metal ponzi system."

In all seriousness, I hope Sprott is somehow testing the physical they receive because there's a whole lot of tungsten filled Gold 400 oz bars looking for a sucker to buy.

Tue, 05/25/2010 - 18:04 | 373038 tomb traider
tomb traider's picture

Would anyone consider Linden Dollars to be a safe haven?

Tue, 05/25/2010 - 18:19 | 373069 Temporalist
Temporalist's picture

I have been thinking about that myself TT.

The problem I see is that without an internet connection you cannot collect, walk to your atm, write a check...it is imaginary until you convert it to real currency or use it in game.

I think it has value though but earning it in game is probably best not investing in it for the next year or three.

Tue, 05/25/2010 - 18:23 | 373087 Nolsgrad
Nolsgrad's picture



Their currency holds up way better than the Euro.

Wed, 05/26/2010 - 01:37 | 373731 nobita
nobita's picture

it´s tied to the dollar genius.

btw i want to ask the crowd, do you guys have the same level of trust for central fund of canada as you do for sprott?

Tue, 05/25/2010 - 18:13 | 373054 DoChenRollingBearing
DoChenRollingBearing's picture

I cannot imagine that buying so many millions worth of gold that he would NOT check it.

Good for Sprott! 

A lesson here: buy gold!  Before Sprott buys it all up!

Tue, 05/25/2010 - 18:16 | 373061 stockfish
stockfish's picture

Tungsten? As in tungsten carbide drills?: http://www.youtube.com/watch?v=HLoVF7vcBtY

Tue, 05/25/2010 - 18:21 | 373080 Joe Sixpack
Joe Sixpack's picture

Same element, but in metallic form rather than as a carbide (as in drills). Use the drills (with or without tungsten carbide) to make holes in the gold (in non-carbide form) to check for tungsten (in non-carbide form).



Tue, 05/25/2010 - 20:06 | 373256 BobPaulson
BobPaulson's picture

Nice one centurion.

Tue, 05/25/2010 - 18:20 | 373074 ZerOhead
ZerOhead's picture

Kinda brings a smile to mind when I think of the Worlds Largest House of Cards Ponzi Scheme built on only a couple of gold bars (less than 1%)... and then a guy like Sprot comes along and takes one itsy bitsy ($180MM) bar away...

Not thrilled indeed... their "doomsday" clock just moved one minute closer to midnight!

Tue, 05/25/2010 - 18:41 | 373133 Amish Hacker
Amish Hacker's picture

Funny how GLD claims to hold something like 1,100 metric tons of AU, but their activity buying and selling never seems to have much of an impact on the rigged gold market. Then along comes Eric Sprott looking to buy just 8 tons, and suddenly everyone starts wondering if the physical market can withstand this sort of off-take.

Get physical.

Tue, 05/25/2010 - 18:49 | 373145 RossInvestor
RossInvestor's picture
  1. Since Rob Kirby, a Toronto-based newsletter writer, broke the story on gold-plated T-bars, I strongly suspect Sprott, who is HQ'd in Toronto, is well aware of the issue and is likely testing every bar.
  2. Trying to offload T-bars to Sprott would be one of the stupidest acts the LBMA and/or CRIMEX could possibly do, because Sprott would immediately go public with the information.  Such a revalation would casue an immediate run on both exchanges.
Tue, 05/25/2010 - 19:05 | 373177 DosZap
DosZap's picture


As I see things unraveling, what makes Sprott think all he is doing, is stockpiling it, so they can get it all in ONE fell swoop?.

Out of the realm of reality, I think a MOST likely sceanario.........

Sprott, being the billionaire he is, I doubt seriously he is as UP on the REALITY of the situation, except from a financial perspective.

Uber wealthy folks, having lived large in safe places, and prospered, most likely have not REALLY looked at REALITY, if the SHTF.

He's doing it as an investment...........he's never likely had to face a LOCKED door, and denied entrance, nor access to what is rightfully HIS.

There's likely going to be a lot of wealthy people, wondering what hell just hit em'.


Tue, 05/25/2010 - 20:22 | 373276 Mesquite
Mesquite's picture


In 1967, when one couldn't openly purchace Au in

USA, one could in Canada..(Even had some represented in their coinage..Course one never saw 'it' circulating..)

Tue, 05/25/2010 - 21:23 | 373366 Double down
Double down's picture

Rumour is he is building a vault in Alberta.  Read that somewhere but I do not remember where.  

Tue, 05/25/2010 - 20:08 | 373255 Mesquite
Mesquite's picture

Re: CD ..beware tungsten bars..

Now WHY would anyone 'junk' this post..??


Tue, 05/25/2010 - 20:55 | 373319 Rebel
Rebel's picture

We are experiencing Junk Inflation. Anyone can sit and "print" junks as easy as FRN's. We need to go on some sort of gold standard. Each member allowed only one junk a day. Put an end to this insanity.

Tue, 05/25/2010 - 20:56 | 373321 Rebel
Rebel's picture

See what I mean?

Tue, 05/25/2010 - 22:02 | 373424 Cognitive Dissonance
Cognitive Dissonance's picture


Cap and Trade ZH junks.

I call first dibs on ZH junks. I'll corner the market by setting up an exchange and soak them up when supply is high and people will sell them for pennies. Then when Harry Wanger and the market both come back (admittedly there is the potential for a long wait here) I'll sell them for $10 each for those so desperate to junk Harry Wanger they'll pay through the teeth. :>)

Wed, 05/26/2010 - 05:55 | 373852 Hephasteus
Hephasteus's picture

Dude. I'm totally not naked shorting my junk. It's just wrong on so many levels.

Tue, 05/25/2010 - 22:23 | 373456 Gunther
Gunther's picture

That test can be done by ultrasound. Ultrasound measures speed of sound times thickness of piece.

Austrian refiner Oegussa made such a testing device until the nineties.  In German:



Tue, 05/25/2010 - 18:01 | 373030 MsCreant
MsCreant's picture

Eric wants to hold it if he is sold it.

Thing is, so do I.

Meanwhile, after testing his bars, it would be cool to see more people with serious resources taking delivery.

Tue, 05/25/2010 - 18:03 | 373036 papaswamp
papaswamp's picture

...that's alot of bacon

Tue, 05/25/2010 - 18:04 | 373040 faustian bargain
faustian bargain's picture

Newb question...does Sprott make money on fees or per-sale commissions, or on spreads? Because the way it's worded, it looks like they would like to sell the stocks at one price and then buy the gold backing it up, at a lower price. They definitely don't want to do it the other way around. So are they shorting gold, or just hoping for a well-timed dip?

Tue, 05/25/2010 - 18:14 | 373057 dumpster
dumpster's picture

commission structure

Management Fee 2.5% annual - (A) Performance Fee 10% of excess over S&P/TSX Global Gold Index
Tue, 05/25/2010 - 22:51 | 373494 Barmaher
Barmaher's picture

2.5% management fee annually?  Holy Crap Batman!   Bullionvault holds more than 19 metric tons and charges 0.2% annual fees for storage/insurance within a good delivery vault.  The custodian, ViaMat, provides audits every business day.   That extra 2.3% every year would be hard to justify IMHO.

Tue, 05/25/2010 - 23:24 | 373540 dumpster
dumpster's picture

2.5 fee can be justified .. small potatoes for a large fund ... in my opinion .


Tue, 05/25/2010 - 18:28 | 373099 knukles
knukles's picture

Management fees.
Read the prospecti before you fondle or invest.

The premium IMO is solely a function of the custodian, segregated and unencumbered nature of the arrangement.  After all, if you want gold, this is the safest way next to real physical coin or bars under the mattress, under the bed or in the safety deposit box that can be had today.  No loans, extensions of credit, promissory notes, delivery receipts from other alternative vaults....just real countable, shiny bars, all there in one safe place which the manager can go see at any time their little heart desires.  Plus, under most circumstances, the good custody is "backed" by the Mint (See prospectus...nice touch relative to other deals out there.

Make me all warm and....opps, mixed company!  Sorry!

Tue, 05/25/2010 - 18:52 | 373152 chet
chet's picture

Do you know the details on where he keeps it?  Is it really safe if the SHTF?

Tue, 05/25/2010 - 19:23 | 373197 knukles
knukles's picture

Royal Canadian Mint. 
Define SHTF and use your imagination.
EMP.  No wire transfers.
Expropriation.  No so good.
Maggot filled ingots.  Outta Luck.
Invasion of the Body Snatchers.  WTF knows.
More Astute Political, Monetary and Fiscal Prowess displayed by world wide Power Elite. Could be Priceless.
Serve as food or smoke?  Nope, grow yer own.
Getting it on the Cheap?  NFW.  Big Premium to NAV. 
Ya' pays for a whatcha thinks a good night's sleep.

Tue, 05/25/2010 - 19:29 | 373198 ZerOhead
ZerOhead's picture

You look a little shady chet yet vaguely familiar... however I'm sure you're OK so I'll tell ya.

It's in the wall safe behind the fan... 36L-24R-36L

If the SHTF however...  the safe may not pass the sniff test!

Tue, 05/25/2010 - 19:49 | 373230 chet
chet's picture

Thanks.  I just want to, um, check in on it.  For the good of the order, and all that....

Tue, 05/25/2010 - 21:17 | 373352 faustian bargain
faustian bargain's picture

Sweet, you put it in a Brick....House.

Tue, 05/25/2010 - 21:41 | 373388 MsCreant
MsCreant's picture

Good catch!

Built mightee mightee, just letin it all hang out.

Wed, 05/26/2010 - 03:06 | 373794 Riley Wilde
Riley Wilde's picture

I would think Sprott makes most of his money by buying up all the new shares at NAV and then slowly unwinding his position at high premiums.  If he is not allowed to trade it himself, then you still need to ask...with the premiums at 10-25% (http://www.sprottphysicalgoldtrust.com/Net-Asset-Value/default.aspx), who captures this premium when new shares are issued at NAV? Surely an acution of new shares would be fairest to current holders.

For all its (supposed) weakneses, the creation and redemption process of GLD keeps it trading very closely to spot gold.  If you have significant holdings in GLD and are worried about its legal/ownership risks, then taking physical yourself of some gold coins or bars (which really should never be at a premium of more than 5%) seems like a far wiser idea than paying an outrageous premium for PHYS, high management charges, and uncertain tax consequences.

In fact, PHYS stores its metal at the Royal Canadian Mint. If you wanted to store your metal there too for much less cost, then try pushing Kitco to re-open their RCM Prestige Account. Alternatively there is BullionVault and GoldMoney which work out less expensive annually for the buy-and-hold investor. COMEX and GLD have their usefulpurposes for frequent trading and/or hedging of your physical. And then paying a small premium for real physical and very little to hide it somewhere yourself is probably the cheapest and wisest move of all.

Anyway, that's my two cents...

Tue, 05/25/2010 - 18:08 | 373048 Temporalist
Temporalist's picture

Dylan Ratigan had Peter Schiff on today to discuss gold and the Glen Beck/Weiner spat.

Unfortunately Schiff had technical difficulties and was cut off but comes back at the end.


Tue, 05/25/2010 - 18:34 | 373113 Harbourcity
Harbourcity's picture

That woman in that report did NOT look comfortable.  Must be her first time on TV - as some points it looked like she was going to pass out or vomit.


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