Eric Sprott's Double Barreled Silver Issue

Tyler Durden's picture

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Turd Ferguson's picture

"Considering all the recent developments in the silver market, it seems unlikely that the silver price will stay under $30/oz for long. The large quantity of money flowing into silver from investors, combined with the potential demand from those who are ‘short’ silver that they do not own, will likely end up swamping the physical silver market entirely."

 

This pretty much sums it all up.

Lots of talk about silver lately at tfmetalsreport. Come on over and join the fun!

 

VegasBD's picture

Keep forgetting to bookmark your blog, if you post link once more I promise I wont ask again =)

flacon's picture

Check this news out from King World News this afternoon:


KWN Source - Gold Will Move $150 Higher Within 5 Weeks

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/12/9_KWN_Source_-_Gold_Will_Move_$150_Higher_Within_5_Weeks.html

 

 

Jendrzejczyk's picture

What is your studied opinion of the silver market, kind sir?

..........(edit) well, now I've replied to a dot and some lines.

justbuygold's picture

I see he failed to mention that he could not source all the silver for his new Sprott Silver Fund .  So how did he find $550 MM worth of silver ?  The answer is he didn't !

Sprott had physical silver in many of his Sprott funds such as his Gold/ Silver fund, Sprott Inc, his Hedge funds, and Sprott Resource Fund.  Likely as much as $250-$300 MM worth.  He then exchanges shares of Sprott Silver to those funds for the physical silver those funds held.  Essentailly a paper swap for physical. The latest filing from just one of Sprott's bigger funds that held a lot of physical , now shows it owns 14.8 MM shares ( $160 MM worth) of the new Silver Fund.  Expect the same from the rest of his funds.  Eric also put in as much as $50 MM himself, I suspect he exchaged his personal silver into that transaction as well , but I have no proof  so treat it as hearsay.

Is this "sleight of hand" any better than anything JP Morgan is doing ?  Seems to be a lot of paper shifting around the same silver.

Where did he find the other $200 MM worth of silver ?  Buzz is that there was absolutely none to be found at North American refineries, he had scamble to buy it in Europe and now has to pay enourmous transportaion and insurance costs to ship it to Canada.

Personally I prefer physical funds that don't play games ( and GLD and SLV are the worst).

 

 

SRV - ES339's picture

It's not a Fund, it is a Trust and you can take delivery once a month. The bullion is secured (in the Canadian Mint) and there are documented third party audits... this is nothing like GLD or SLV.

I won't debate the rest of your (mis) information, but you have clearly been misled. You're mixing Sprott Funds (which do not pretend to hold bullion other than as noted as an investment) with the Sprott Silver / Gold Trusts... they are, IMHO, a viable vehicle for PM bullion investment.

Curious... have you read the prospectus?

http://www.sprottphysicalsilver.ca/documents/Sprott_Physical_Silver_Trust_Prospectus_US.pdf

 

Goldilocks's picture

Hmmm, I thought silver & gold (the real thing - in your possession) was ... "a viable vehicle for PM bullion investment."

justbuygold's picture

You obviously work for Sprott and are trying to contain this. Just one look at your ID tells us all that.

SRV = Silver   ES339  = Eric Sprott 339

I wonder if they charged shareholders of all those funds a nice 6-8 % commision as well.  I also wonder about the capital gains from the " transferred silver" .  Who eats that or does it flow through ?  Is there possibly a doubling up of managment fees of the fund that holds the PHSV shares and the PHSV itself.  Lots of questions.

However.....Here is the proof of the holdings:

http://secwatch.com/filings/view.jsp?formid=7448845

 

Sprott Asset managment owns  14.97 MM shares of Sprott Physical Silver trust

Sprott Hedge Fund L.P owns 3.28 MM shares

Sprott Hedge Fund II owns 3.33 MM shares

Sprott Foundation owns 4.98 MM shares

 

Collectively thats  46% of the float of the trust according to the 13D.   Lets call it $250-270 MM worth.

From the 13D filing......

Item 5. Interest in Securities of the Issuer.     (a), (b) The percentage of beneficial ownership has been calculated based upon an aggregate of 57,500,000 Units outstanding, according to the Trust's most recent Form 6-K that was filed on November 3, 2010.   As of the date hereof, the Investment Manager and Mr. Sprott may each be deemed to beneficially own 14,971,815 Units, or 26.04% of Units of the Trust, Sprott Hedge Fund L.P. may be deemed to beneficially own 3,288,300 Units, or 5.72% of Units of the Trust, Sprott Hedge Fund L.P. II may be deemed to beneficially own 3,329,200 Units, or 5.79% of Units of the Trust, and the Sprott Foundation may be deemed to beneficially own 4,982,115 Units, or 8.66% of Units of the Trust.

 



Exhibit A

Transactions in the Sprott Physical Silver Trust Units
Sprott Hedge Fund L.P.

Date of Transaction Number of Units Purchased/(Sold) Price per Unit   11-3-10      3,288,300    $10



Sprott Hedge Fund L.P. II

Date of Transaction Number of Units Purchased/(Sold) Price per Unit   11-3-10    
    3,329,200   $10



The Sprott Foundation

Date of Transaction Number of Units Purchased/(Sold) Price per Unit   11-3-10     4,982,115   $10



Shares Purchased by Other Entities Managed by Sprott Asset Management L.P. or Eric S. Sprott

Date of Transaction Number of Units Purchased/(Sold) Price per Unit   11-3-10   2,109,200   $10   11-3-10   1,263,000    
  $10

 

 

justbuygold's picture

HERES  AN  IDEA  ! ! !

Why don't I take $50 MM in physical silver held by my local bank as inventory.    I form a physically redeemable silver trust (SSV1)  and sell the bank shares in exchange for the physical silver.  Maybe the public buys $50 MM of the trust too and I buy $50 MM more physical silver in the open market .  I now own a $100 MM silver trust (SSV1)  backed by physical silver in my local bank vault.   

Now I get really fancy.  I sell all the silver in my first silver trust (SSV1)  to a second redeemable silver trust ( SSV2) that I list in Europe.  I give  SSV1,  $100 MM in shares . They are fine though becuase in theory they the shares are redeemable so they can get their physical quickly if they want.  Furthermore it never leaves my local banks vault , only the paper title changes to ownership by SSV2.  The public also buys $100MM and so SSV2 becomes a $200MM vehicle.    Then SSV2 sells to SSV3  , SSV3 to SSV4 etc  ...until suddenly there is a multitude of huge silver funds out there backed by very little REAL physical silver.

This is essentially how SLV and GLD works ( re:  subcustodians) although more complex derivatives are involved.  Like Maguire said, the same silver is sold 100 x over. It may be SLV, COMEX , LBME , etc  all oversold  100-1 .

The minute everyone at SSV1 wants physical, the whole thing crumbles down the chain.  When Kaiser says buy physical silver  THIS IS WHY.  Go out and get as much physical as you can ASAP.  The whole thing will crumble soon when this whole paper shuffling game ends.

 

 

badewann's picture

Nice and understandable explanation. Thank you!

That`s exactly how it is done outa there. Wouldn`t trust nobody.

 

justbuygold's picture

I have studied all the silver vehicles right down to the minutiae in the prospectus of each.  In the end though I would recommend to anyone to own a blend of silver stocks,  silver funds/trusts/    , and finally physical.   The silver stocks give you the most upside leverage,  the trust allow you to hold big physical positions without dealing with storage, and finally, owning physical ( coins, small bars, wafers)  gives you safety in a Zimbabwe type hyperinflationary event.

Good silver stocks : Tahoe Resources , Silver Wheaton  ( both have great growth and excellent leverage)

Best Silver trust :  Central Fund's  Silver Bullion Trust  ( lowest Mer/admin fee in world, trustworthy mgmt, long history, no paper type games)

Best Physical  :  Silver Maple Leafs, or several of the Amercian Silver dollars. ( lowest premiums for both, easiest to obtain)  also J&M 1-10oz bars/ wafers.

 

 

GoinFawr's picture

Thanks for the insight justbuy, it sure looks like you've done your homework.

Crash Sprott! Buy Silver! (hehe jk) Though, if that was the case, you'd think Sprott would avoid recommending buying physical silver themselves. If we see them show up as one of the 'big commercial shorts' positions, we'll know for sure which way the wind blows, I guess.

Doctor Detroit's picture

Who is Eric King and who is his "London source"?

gwar5's picture

Go to Eric King at kingworldnews.com  Worth a look, ZH has used them as a resource. 

King has articles and interviews with newsmakers and regulars. Turk or Butler is probably his London source. They are usually spot on. I think Turk called 30$ silver 2-3 weeks before it happened, and it unfolded just like he said.

You'll also find interviews with people like Jim Rickards, Sprott, and newsmakers like Nigel Farage of the day etc.

I think King also did an interview with Andrew McGuire right at the time McGuire was turning in JP Morgue to the CFTC for silver manipulation -- and his site was hacked and went down mid-interview, by TPTB?

dumpster's picture

who is doctor detroit 

 

and why do the digging for you,,  either you find out your self or  why bother to feed you from a beggers bowl

Concentrated power has always been the enemy of liberty.'s picture

I already have plenty of silver.  What I really want is a link to buy Turd's yellow hat!  :D

mick_richfield's picture

Here you go, Con.

http://www.stage-fright.com/hufocohatcod.html

Anybody with a complete sentence for a handle deserves a Really Big Hat.

CD's picture

Not that TF needs my endorsement, but he really has done an outstanding job commenting, analyzing and yes, even offering prognosticating on the blog. Thanks for all the effort and insight. tfmetalsreport dot blogspot dot com for those too lazy to Google.

Also, Mr. L. Hendrix is doing his thing at lhmarketwatch on blogspot.

And while we're at it, cougar_w has shared his short fiction gems at madscienceunlimited. Makes me wish I had enough time/talent to share something myself... Quite the incubator you have going here, Tyler.

delacroix's picture

cougar's not a woman?

CD's picture

Now that you mention it, it's perfectly possible, never thought of it that way. Can't remember if cougar ever made a gender-obvious post, which in itself may also make it more likely. Either way, the stories are a lot of fun, and dedicated to us at ZH - definitely worth a look.

Mr Lennon Hendrix's picture

To the junkers!  We were at $1430 only two days ago!  Calm down!  I am not making a wild prediction here.

Arius's picture

how can they calm down when they already shorted gold/silver?

-- you were correct so far this week!

BigJim's picture

OK. As I'm long PMs I'll bite.

What makes you think 1430 tomorrow?

Mr Lennon Hendrix's picture

e are at the bottom of support.  hat news would have gold lower?  England is going to continue their own QE program while maintaining rates at zero.  China raising rates would spark volatility and if there is a safe play right now it is gold.  Gold has quadrupled this decade.  Gold has doubled from its bottom during the heighth of the very public financial crisis.  This crisis continues, but the wanker bankers must hide their actions.  They will spin their book keeping to have gold and silver absorb the losses on MBS etc; the Federal Express Reserve Bank will help with that too, as the Bernank prints his way into oblivion.  The stars are calling down from the heavens that earth has lost its light.  Those stars, they have a point; a brilliant one!

ColoradoBikerChic's picture

TF... right on the money with the Reverse Head & Shoulder call... clear as a bell on a SLV 3day hourly spread, at the close today (even better,  note the DI- DI+ crossover early AM with a nice pull back to the 21MA near end of day where it bounced a sweet hammer at 15:30hr), with the cake icing of a 1million Vol spike in the last minute before 4pm EST NY close.  Running nicely in afterhours.  Still have resistance though on the Hourly, 100MA & 50MA still overhead.

Bolweevil's picture

Ooh! Finporn talk! Is that a Softail (HD) between your legs?

smeagol's picture

TF

I been trading off Blythes takedowns for the last 2 years and started a thread a few weeks ago analysing and commenting on the takedowns.(you got a mention a couple of weeks ago check it out: (I also linked your blog to my own)

Tracking commercial takedowns and market commentary

http://preciousmetalsnews.blogspot.com/

dark pools of soros's picture

are you sellin on each pop?   cuz you should of just bought it all 2 years ago and ignored the bitch

smeagol's picture

if I'd have done that I'd have missed all the fun. Not shorting so much now mostly buying dips, back in 09 early 10 it was short the fix time and then catch the bounce.

Bolweevil's picture

Nice work. Bookmarked.

Turd Ferguson's picture

Wow, smeagol, your site is terrific! Its an honor to be included. Thanks!

smeagol's picture

Thx, its just my little office where my RSS robots trackdown news on my behalf(saves on research time)

iota's picture

I popped over out of curiosity but I think I might be returning just for the hand drawn charts.

High Plains Drifter's picture

Just think about it. All of these years the silver bugs, much more so even than the gold bugs, have suffered long and hard and taken lump after lump after lump never ceasing to keep up the belief. Criticized, laughed at and impuned day in and day out and now in this area that has been called "unchartered territory" our light is about to shine and shine well and shine brightly in the darkness of American finance. Let it shine , let it shine brightly, let it shine for all to see because what was once someone's junk, is now someone's shining treasure, a treasure made up of real , yes , real money, the poor man's gold. Drink up my fellow true believers, for your time is coming fast, at a trot. For too long we have waited for these days, but just like clockwork our goals are being met once and for all, as our plans for the future come into fruition because we knew all along these criminals that run the financial systems of the world, would not fail us, in their deceit. God bless the silver bug and gold bug and may those who have destroyed this nation, get their necks stretched at the end of chinese ropes and may their god , whoever that may be, have no mercy on them for the men in the streets will not. That my friends is one sure thing you can bet on.

Bring the Gold's picture

Well said High Plains Drifter. I agree pretty much point for point.

 

Disclosure: Long pitchforks, torches and rope 

RobotTrader's picture

Virtually every "guru" on CNBC, especially the Fast Money boys are very bearish on silver.

Tons of guys expect to make a "killing" on its collapse.

Therefore, I'm expecting a huge upside spike to blow these guys out.

Let's cross our fingers and hope Cramer doesn't start hawking it tonight.

Testicular Cancer's picture

Robo, is that really you, bullish on silver? Quick, what's the temperature in Hades?

Cheesy Bastard's picture

Bullish on silver, nothing jiggly in sight...Who are you and what have you done with Robo?

trav7777's picture

RT just tells it like it is.  On some days, PMs actually go down.  And fluffed up .coms like NFLX go up.  A lot of people can't handle price action not doing what they'd like it to.

Cheesy Bastard's picture

True.  Plus, boobies are nice.

GoinFawr's picture

Riiiiiight. Either that or he just flops faster than he flips.

eg. Seen any follow up on this 'aaplicious' call of his?http://img411.imageshack.us/img411/6964/robotloser.jpg

Didn't think so.

 Robo denigrates, then when he's wrong immediately flips and pretends as if nobody noticed, yet some do notice regardless.

Seriously though, I call BS Trav: Robotrader's agenda is as plain as the nose on your face ...er, nm. Still, I'm surprised it's lost on you. Ah hell, perhaps you're right: he's just another 'Captain Hindsight, Master of the Bleeding Obvious' masquerading as a mild mannered HFT.

 OR Maybe it's 'opposite day'!

http://www.gocomics.com/calvinandhobbes/2009/07/16/

Mr Lennon Hendrix's picture

Fast Monie had Peter Barnes on last month and I thought Nijarian was excited enough about it to do a touchdown dance!

Call to the Floor: Silver Wheaton CEO:

http://www.cnbc.com/id/15840232?video=1638179884&play=1

SilverRhino's picture

I think that's the first time I have ever seen you bullish on silver in my admittedly short tenure here.

High Plains Drifter's picture

Come on Robo. If you are bullish on silver, then show us some tits.