Sprott Asset Management Adds More Gold To PHYS

Tyler Durden's picture

Update: correction to the prior post due to a link up to an old regulatory release. PHYS is indeed buying more gold, however the actual amount is undisclosed as per the release.

Sprott Physical Gold Trust
(the "Trust") (TSX: PHY.U)(NYSE: PHYS), a trust created to invest and
hold substantially all of its assets in physical gold bullion and
managed by Sprott Asset Management LP, announced today that
it has launched a follow-on offering (the "Offering") of transferable,
redeemable units of the Trust ("Units").

The Trust will use the net proceeds of this Offering to acquire physical
gold bullion in accordance with the Trust's objective and subject to
the Trust's investment and operating restrictions described in the
prospectus related to this Offering. Under the trust agreement governing
the Trust, the net proceeds of the Offering per unit must be not less
than 100% of the most recently calculated net asset value per Unit of
the Trust prior to, or upon determination of, pricing of the offering.

The Units are listed on the NYSE Arca and the Toronto Stock Exchange under the symbols "PHYS" and "PHY.U", respectively. The Offering will be made simultaneously in the United States and Canada by Morgan Stanley and RBC Capital Markets.

One look at the premium to NAV shows why the sale makes sense: the difference between the NAV and the price is the highest since the March highs, despite paper gold trading at all time records.


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way-out-west's picture

lead investors? like as in: Pb (#82) Must be a heavy offering.


mynhair's picture

Grrr...was coming back for that very point...

Libertarians for Prosperity's picture

According to that chart, it appears that paper gold and physical gold have NOT decoupled, at all - not even close.

If anything, it is clear that paper gold consistently trades for a premium over physical.

So... two things:

The doomer goons who tell you that paper and physical have decoupled are FULL OF SHIT.

And the same doomer goons who tell you that physical is worth more than the paper are also FULL OF SHIT.  

DoChenRollingBearing's picture

You take the paper.

I´ll take the physical.

We´re good!

Hacked Economy's picture

I was perusing eBay last night to see if I could cherry-pick some good below-spot coin purchases (as I often do from inexperienced private sellers), and the auction ending prices for SAEs are still about USD$10 above silver spot.  The real-world premium for SAEs through eBay sales was only about $3-$4 a few months ago.  Even the "low end" public market of eBay seems to understand that physical is worth more than the paper price.

I'm going to try to load up on some more over the next week before the QE3 train leaves the station to Neverland (which may be soon).

optionsoptions's picture

Do you or anyone else know why people pay so much over spot on Ebay? It just reeks of stupidity. Why would people do that when you can get SAEs from reputable coin shops for less than $4 over spot.

I honestly don't give any weight to Ebay prices. It just seems like the same type of idiots that buy $5 gallons of milk from a gas station when the grocery store literally right next to it is selling it for $3.25

Temporalist's picture

Because most online dealers charge a base fee for shipping one can buy from the same ebay seller one coin or more and still come out cheaper.

SilverDosed's picture

Can't forget Ebay bucks and all the other weird incentive programs that allow you to earn points and percentages that can only be redeemed on ebay. Free silver for people that do a lot of business on ebay I hear.

V in PA's picture

I bid as many as  I can at 5% below melt (Including shippping). Might only win 1 out of 100 but it's still a WIN!

Hacked Economy's picture

Yep...that's what I do, too.  I carefully choose my targets (sellers and/or specific listings), and then bid at a certain percentage below melt as well.  I only win about a third of the listings, but my end result is at least 5% below spot value, including shipping.  Not too shabby.

The most fun is "sniping" at the very last second and taking someone else's prize right from their hands.  HA!

This only works for certain classes of coins...although every great once in a while, I score an SAE or two at spot.  Not a huge deal that will tilt the earth off its axis, but every little addition of silver I can trade my FRNs for is another step in the right direction.

Libertarians for Prosperity's picture

They pay the huge premiums for one reason: they are gullible idiots who are given bad information by propaganda whores.  

The same doomer goons who spread the disinformation about physical/paper decoupling and how paper is about to collapse are the same morons who tell others that "price doesn't matter." 

Pumped full of doomer propaganda, the "beans, bullets, and bullion" lemmings go on eBay and pay full-retard prices believing that the only thing that matters is availability, not price. 


prole's picture

If you want to see a retard.....Look in the mirror.

Zero people on this site are buying what you are peddling.

tmosley's picture

He knows that quite well, so he changes user names every ten weeks or so.

Hacked Economy's picture

@ Libertarian,

Okay, I hear you...so then "decouple" yourself for a moment from that premise (the doom-and-gloom theory) and consider it an investment, then.

I personally would never pay $10 over spot, but you can find SAEs for about $5 over spot right now on eBay (I just bought a couple more a few minutes ago, actually).  Under normal circumstances, this wouldn't be a solid investment strategy.

But when you consider the strong possibility of QE3 looming on the horizon and spot quickly rising above the price you just paid...THEN it makes sense, right?  That's what some of us are doing...investing.

I buy and hold, in case of an economic meltdown.  Even if we theorize that there will be no true hyperinflation, but at least a few years of instability as the world goes through its throes and changes...the printing of QE3 and the uncertainty of fiat currencies will cause PMs to increase anyhow, even if at slower "non-hyperinflation" rates.

If you bought something at $40 today and could turn around (in a pinch, if you had to) for $60 next month, wouldn't you invest in it?  Instead of calling those that DO idiots?

Are you kidding's picture

Because MOST people...are stupid and lazy!

ezcearhoc's picture

Ebay prices are very complicated. You must understand slick dealing on Ebay for the premium to make sense.

In 2008 I was Ebay-buying all the gold I could afford, and even more, at Ebay prices 25% over spot. At the time Microsoft's Bing Cashback program was giving up to a 35% cash rebate on each Ebay "Buy It Now" auction purchase. (the promo's been dead since last summer. look it up, here's a graph of the different cash rebate rates they were giving at different dates in 2008 http://www.cashbackr.com/bing-com-ebay-cashback-trend-chart ), meaning that I was buying gold at 10% under spot. That type of behavior was responsible for a lot of Ebay inflation at the time. To the ignorant observer, buyers like me were making stupid purchases, because the observer wouldn't know that the buyers were actually buying well below spot. Microsoft was funding the difference as an ill-conceived promotion for their Bing search engine. I've heard that MS lost $hundreds of millions on that program.

Since you're talking about silver, consider the 20% VAT in England. If an Englishman goes to his local shop to buy silver, he pays the shop's premium + 20% VAT. If an Englishman buys silver from an American seller on Ebay, he pays 0% VAT. Paying a 17% premium on Ebay, plus shipping, is still significantly cheaper than he can get silver at a local shop. So a roll of twenty SAEs for even as high as $900 (after shipping) on Ebay is $71 cheaper than his local dealer charging only a 6% premium ($38.19*20[coins]*1.06*1.20 [that last one is for 20% VAT] = $971.55). Paying a large Ebay premium is the only semi-reasonable option those people have.

Many local dealers in the USA charge sales tax (they ALL DO if they're supposed to, right? ;-) ). Currently Ebay is rebating 2-4% for a lot of people through Ebay bucks. Certain places, like Chicago, have local+state sales taxes up to 16%. In Texas the sales tax can go up to 14.5%, depending on the locality. That's on top of the shop's premium, of course. Depending on your state sales tax, this makes Ebay up to [4% Ebaybucks + up to 16% state/local sales tax] 20% discounted compared to going to a local dealer and paying cash, *if* your dealer is charging sales tax like he should.

So for many people with shitty local/state taxes, or for the poor people suffering VAT, paying huge silver premiums on Ebay is still the cheapest route to go.

optionsoptions's picture

Awesome answers guys. Appreciate the knowledge on the rebates and the effect they have on those significant premiums.

I just wish Obama could read this last reply. Taxes really do kill jobs!

HungrySeagull's picture

We will sort that out tomorrow at 5PM Eastern courtesy of Frank and Dodd.

Confucious 222's picture

So who has been making this so-called argument about gold?

It is SILVER if anything that has the significant premium in physical over paper.

Sorry to chill your rant 



akak's picture

Yes, promises to deliver a physical asset are ALWAYS worth more than the physical asset itself.  In the Bizarro World of pro-bankster shills such as yourself, that is.

You must really be butthurt, WilliamtheBastard/TexasGunslinger/18OtherTrollAliases, that your former REAL libertarian, pro-gold nemesis, tmosley, does not spend much time on these boards any more. Whatever is a disingenuous, malicious troll to do?

Ghordius's picture

"Normal" would be that you pay a small premium so that a very trustworthy bank takes care nobody steals your gold!

akak's picture

"Normal" would be that you pay a small premium so that a very trustworthy bank takes care nobody steals your gold!

And just where, pray tell, can anyone find such an institution today?

Even if a "very trustworthy bank" were to exist today, how "trustworthy" could it be when the complete banking system, not to mention the financial and monetary systems backing that banking system up, are all equally threatened with collapse?

Rynak's picture

Correct. What he instead should have said is: (Paper) trust should trade at a premium, IF the issuer is someone whom people trust strongly. On the other hand, physical should trade at a premium, if most issuers are not considered trustworthy by many.

Things get schizophrenetic, when you consider a scenario, where the buyers of (paper) trusts, and the buyers of physical, are very different people.... to the point, that one of the two camps doesn't even buy from the popular exchanges anymore. THIS is where decoupling happens..... and i may add: a decoupling so hard, that in fact both can trade at the same price, but for completely "decoupled" reasons!

El Oregonian's picture

Absolutely, "decoupled" like in a bad marriage...

BrianOFlanagan's picture

actually, paper should trade at a premium to physical.  Paper offers lower bid/ask spread, better liquidity, leverage and financing, lower security risk, no storage issues.

Vic Vinegar's picture

Now that's not too incendiary a statement now is it?

eisley79's picture

its the truth, so of course not, he just forget one thing


"if its backed by the real thing."


otherwise refer to Dumb & Dumber, and the Lambo IOU.......YOU might want to hold on to THAT one

BrianOFlanagan's picture

perhaps, but seriously.  With physical you have a wide bid/ask, low liquidity, you have to pay 100% cash to buy it and you have to figure out how to store it where it won't get stolen.  What's so great about that?

Rynak's picture

Shut the fuck up! You've been repeating this argument across multiple threads, over and over, completely ignoring scenarios of "needs", where that "advantage" is irrelevant, yet the disadvantages matter.

Just fuck the fuck up, sockpuppet. Most PM buyers around here DO NOT TRADE, BUT ONLY CARE ABOUT PHYSICAL DELIVERY! What's the stock on the comex again, relative to outstanding "non-trusts"? There goes your "won't get stolen" - it fucking doesn't even exist! You're "trading" illusions. That can be profitable if you never expect delivery, but when you expect delivery, traditional paper trusts (those not fully allocated) are the most stupid thing one could do.

Rynak's picture

To the braindead junkers: A special FUCK YOU for you too.

Here's why: You're junking a post, simply because it is swearing towards someone who:

- Has in past threads constantly repeated his argument.

- Has continued to do so, when he was confronted with the fact, that bid/ask lag is irrelevant, if you're investing longterm, instead of being a daytrader. His only "argument" against this, has been, that this is just paranoid doomsayer talk. Same for mentioning that those popular ETFs are backed less than 25% by the real thing, and that this may in the longterm mean, that the "issuer" will default on his obligations..... also just paranoid tinfoil hat doomsayer talk.

- Is mainly commenting in PM-related threads, and offers no variation on his argument


Phrased another way: You're safeguarding a sophistic troll. Be proud of your achievement, you piece of shit!

BrianOFlanagan's picture

The bid/ask is highly relevant.  What if you for some reason have to sell?  With a paper contract or ETF you can sell at a minute's notice at a miniscule spread, rather than dragging all your metal down to the dealer at a 5-10% spread.  

ETFs are backed by less than 25%, how so?


Rynak's picture

If i have to sell, i just sell to anyone who is willing to buy, regardless of what current rules are regarding exchanges.

In current circumstances, i can sell in a matter of hours, but not in a matter of seconds...... no problem at all for longterm investment, but a problem for daytraders. (this isn't theoretical. I checked with my favorite local dealers, and all of them say, that right now i can just walk in, and sell at spotprice)

What changed regarding longterm investment considerations? Nothing.

As for how ETFs are backed less than 25% (in the case of silver).... it's quite simple: Check the number of issued trusts at full spotprice. Then check inventories of the exchanges, as well as inventories of exchanges from where issuers could buy.

Bottom line: They cannot deliver. They will at best offer cash.

BrianOFlanagan's picture

there are 2 billion ounces of silver bullion above ground - plenty to go around.

Rynak's picture

Above ground =/= available to issuers

Next trick, sophist?

Bay of Pigs's picture

Only 2B? LMAO. Sure there is Bri....


Bay of Pigs's picture

Why do you assume I don't know about this or haven't read it? I am well acquainted with the numbers, and they don't add up.

You act as if gold and silver holders are somehow intellectually lazy and don't spend time researching things.



Rynak's picture

Answer to the "why":


a track record full of junks, and which is remarkably PM obsessive. I wonder why.

Could it be, that he is just another PM-troll?

oldman's picture

No one takes physical with any intention of ever selling

Bay of Pigs's picture


Anyone defending or supporting the COMEX, SEC, CFTC and the bullion banks like JPM (concerning gold or silver), is just a plain fucking idiot. End of story. 

Traders like Flanagan should know better than anyone else on this (and they do) yet they continually post this bullshit over and over again.


BrianOFlanagan's picture

I have no problem with Comex or the CFTC - both are handling their responsibilities quite well.  The SEC is a completely different story, though.


Bay of Pigs's picture

I know you don't. That's exactly why you have no credibility to post on this topic.


Libertarians for Prosperity's picture

Anyone defending or supporting the COMEX, SEC, CFTC and the bullion banks like JPM (concerning gold or silver), is just a plain fucking idiot. End of story....

If you're going to accuse these guys, then you must also accuse HSBC of being manipulators and thieves because they're named in virtually every silver manipulation lawsuit along with JPM.

You must also include Morgan Stanley, since they were accused in 2007 of fraudulent silver manipulation games: loaning out 100oz of silver for every 1oz they actually had, charging storage fees on this phantom silver, etc.

Now, here's the part you don't know... 

When Sprott launched PSLV, which bank do you think Sprott chose as one of the main underwriters?  HSBC.

Today, when Sprott announced his secondary PHYS offering, which bank did he choose?  Yep, you guessed it, Morgan Stanley.

This, from a guy who markets himself as the one, true Wall Street Robin Hood who is leading the "little guys" in the fight against manipulation in the metals market.  It's pure hypocrisy at its most obvious.   

Whether or not you goons believe in gold and silver is one thing, but for all of you to worship Sprott, and believe that he is any different than any other opportunistic, billionaire hedge fund manager really illustrates your ignorance.  Sprott just happens to be the guy with the catnip du jour, just like Paulson had his day in 07/08. 


SilverDosed's picture

Makes sense, you've given me something to look into at least. Personally I see paper silver as paper silver; who knows whats behind it but it serves its purposes for me. Physical is for stacking, paper is to make more paper to buy more physical to stack. It works till it doesnt anymore. I havent looked too deeply into Sprott's game but what you say is plausible. You should post links when you make statements that bold but I know how to use google.

Libertarians for Prosperity's picture

Anyone defending or supporting the COMEX, SEC, CFTC and the bullion banks like JPM (concerning gold or silver), is just a plain fucking idiot. End of story....

Pay of Pigs...  You do realize that you've just called Sprott a "fucking idiot," don't you?

Rynak's picture

What a lame-ass flamebait - try harder!

<25% allocation =/= near 100% allocation.

One may argue about the longterm safety of storage (which is why i still prefer personal storage over "sprott storage"), but the allocation percentage alone, puts Sprott into an entirely different league than traditional "ETFs".

SilverDosed's picture

I actually think these troll posts are helpful as they spur conversation, argument, and hopefully the spread of real knowledge if people back their arguments up with facts and documentation. Sure they're tired if you've been reading ZH for a while but sometimes you have to repeat the same battles many times even if only to educate the new readers.

No I didnt junk anyone as you can see by my sn which dog I've picked in this fight but I can see where some would take offense at the delivery of some arguments more than the actual arguments themselves. Ad Hominem attacks detract from credibility even if you're on the right side of the argument. This is fight club however so anyone that disagrees with me can fuck off and die.

Rynak's picture

In theory agree, but do not in practice agree.

The "popular"  understanding of useful trolling, it is NOT just replies that add potential usefulness to trolling, but instead that the troll-post itself is designed to provoke discussion that allows to break false/untrue beliefs.

This most of the time is NOT the case with PM-trolls. All they intend to do, is to actually sabotage discussion of alternative opinions, and provoke bipolar camping.

What a "useful" trollpost on ZH would look like, is one that - while provocative and anti-common consensus - is designed to question actual contradictions in common consensus. On average, posters which provide this on ZH, are not trolls, but simply people who ignore common consensus and post questions and opinions because they notice popular opinion does not add up - instead of just trolling for the sake of trolling.

I'd love to say that ZH trolls are actually useful, because if they were, they would provide something which i someway miss on ZH (and which is why i myself frequently post opinions, that are not in line with common consensus). But honestly and sadly, thats not the case. Your typical ZH-troll post is worth nothing more than the trashcan.

Perhaps, if we had less paid psyops and sadists, and more trolls who post purely for ridiculing contradictory common consensus, i would appreciate them. But as it is now, they're just a plague.

hack3434's picture

Secrecy...You're in the wrong business my friend.