Sprott Comments On Liquidity Disconnects Between Paper And Physical Silver Market

Tyler Durden's picture

For all who need another confirmation that the silver physical market is increasingly more illiquid, at least compared to its infinitely dilutable and utterly mangled paper cousin, here is PSLV manager Eric Sprott himself: "Frankly, we are concerned about the illiquidity in the physical silver market," said Eric Sprott, Chief Investment Officer of Sprott Asset Management. "We believe the delays involved in the delivery of physical silver to the Trust highlight the disconnect that exists between the paper and physical markets for silver." Curiously, this has occurred even as the US Mint reports that sales of silver in December was the lowest in 2010, at just 1,772,000 ounces. It is unclear if this number was this low due to an actual supply shortage at the mint. Perhaps the fact that 2,221,000 silver ounces were sold in just the first week of January, a number which if run-rated would be an absolutely all time monthly record, should provide some clarity on this issue.

From Sprott Asset Management:

TORONTO, Jan. 10 /CNW/ - Sprott Asset Management LP is pleased to
provide investors with an update on the delivery status of silver
bullion purchased by the Sprott Physical Silver Trust (NYSE ARCA: PSLV,
TSX: PHS.U) ("Trust").

As of November 10, 2010, the Trust had contracted to purchase a total of
22,298,525 ounces of silver bullion. As of December 31, 2010 a total of
20,919,022 ounces of silver bullion had been delivered to the Trust.
The Trust expects to take delivery of the final 1,379,503 ounces of
silver bullion by January 12, 2011 and will subsequently publish the
serial numbers of all bars held by the Trust on its website: www.sprottphysicalsilver.com.

"Frankly, we are concerned about the illiquidity in the physical silver
market," said Eric Sprott, Chief Investment Officer of Sprott Asset
Management. "We believe the delays involved in the delivery of physical
silver to the Trust highlight the disconnect that exists between the
paper and physical markets for silver."

h/t Robert

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Rahm's picture

Physical Maple's Bitchez!

Sgt.Sausage's picture

Physical *anything*, my "bitchez".

Maples are as good as any other.

Ragnarok's picture

here is SLV manager Eric Sprott

 

*PSLV

boricuadigm-shift's picture

Muy bien.  Por fin veo a otro boricua en este blog.  Llevo mirando este sitio desde que era blogspot hace ya mas de un año.  El mejor sitio financiero!

txapela's picture

yo lo llevo mirando desde hace mucho ya, pero solo hace varios meses que se convirtio en algo diario para mirar.

akak's picture

Oye muchachos, es este sitio de repente ahora en espanol?!

Plata putas!

Bastiat's picture

"Plata putas!"

I got that bit!

 

akak's picture

Y no se olvide la platina y el paladio tambien!

txapela's picture

yo, yep. i got the math question wrong. it fucking asked 19 * -17 = ??? I wrot ein the answer and it gave me some shit about answer couldn't be more than 2 character sor some such shit?

Ragnarok's picture

Another diversion to keep the robots at bay.

txapela's picture

bro, that's incorrect. Eric Sprott manages PSLV, not SLV. PSLV is a closed fund. SLV is an open fund. Different funds. I'm doubting that he's running two different funds for different companies of the same precious metal. Conflict of interest and all.

Cash_is_Trash's picture

I dumped SLV for PSLV last week. If you notice the charts, SLV doesn't trade as accurately versus the spot price.

Sprott trades with greater premium on the upside in comparison to SLV.

Sudden Debt's picture

Actually, most of the silver bullion sites sited that due to the holidays, deliveries where suspended untill january.

small watcher's picture

A keen-sighted reader saw "sited" where "cited" should have been seen...

billhilly's picture

Most excellent, my first morning laugh.

barkster's picture

we cite you with this citation for your oversight of this site.

stewie's picture

Wow you guys are on a roll!

Non Passaran's picture

Yeah, right, and November 11, when they ordered that silver, was the last working day before Christmas.

Oh regional Indian's picture

It would be nice to trust the Sprott folks, given what they do for a living and knowing there is a genuine phys shortage looming (supply concerns here in India, especially on big run-up days and their immediate aftermath), this seems like the wrong source. It is in their interest to spread such news (vague of course) to stampede a small prt of the herd their way.

Silver positive of course and maybe that is all that really matters.

ORI

http://aadivaahan.wordpress.com/2010/11/13/wisdom-for-warriors-4/

breezer1's picture

the dealer i use has had problems suppling bars. when i order it takes less than 5 business days to deliver. for sprott to buy 22mm ozs and for delivery to take over 2 months tells me that there was a supply problem. it could be armoured trucks are too busy but it seems to be a common problem and has been like it for a year or two.

Oh regional Indian's picture

Same thing here breezer. Caveat Emptor is all.

ORI

Pegasus Muse's picture

The mint I use is running hard but cannot keep up.  Huge orders (numbers & size) in Nov/Dec.  Delivery time has doubled.  Used to be 4-6 weeks now its taking 8-12 weeks. 

They buy and sell Ag & Au.  They're selling a lot more than they are buying.

dognamedabu's picture

Sure Sprott talks his book but IMO is a straight shooter. I am investing in a handful of cos of his and they are second to none when it comes to getting it right. His team(including the recent addition of Rick Rule) is about the best in the business. I see no advantage for him to mislead people about the market except for short term gains which, following him over the last decade he is anything but looking for short term gains.

 

 

Cash_is_Trash's picture

Eric Sprott and John Embry think it's hittin' $50 this year...

Oh regional Indian's picture

Good to hear first-hand dogn. Thanks.

ORI

Sudden Debt's picture

SLV was born in April 2006, with just 21m ounces of silver held in trust for its shareholders.  As expected, it opened up a huge new conduit for traditional stock-market capital to flow into silver bullion.  The more stock investors who buy SLV, the more silver this ETF’s custodians have to purchase to shunt this excess buying pressure directly into the underlying physical metal itself.  Last month, SLV’s holdings hit a new record high approaching 353m ounces!

To put this into perspective, global silver production in 2009 ran about 700m ounces.  Stock investors’ vast capital has already absorbed half a year’s worth of global silver production in the primary US silver ETF alone!  This new source of capital has accelerated this silver bull while making it much more consistent than the 1970s one, because the dollar inflows are more constant

shortus cynicus's picture

Main custodian of SLV is JP Morgue with conflict of interest by shorting silver at COMEX. 

So please anyone stop writing that SLV "has silver", it is one of many fractional reserve scams embedded deeply into a system. BIS and its "gold" certificates is probably the second one, but a little bigger :-)

strannick's picture

Harvey notes how the SLV redemptions, presumably by authorized participants grabbing physical, almost identically matches huge withdrawls from the Comex.

http://harveyorgan.blogspot.com/

Bullionbulls has an account of double counting SLV in physical inventories.

Physical silver in your possesion puts one beyond the reach of such terms as 'unallocated' 'authorized participants' and 'double counted'

Quinvarius's picture

And to put that inpersepctive, JPM has 3.9 billion shares outstanding.

Stormdancer's picture

@SuddenDebt

Giving Adam Hamilton credit for his words would go a long way toward enhancing perception of your own integrity.

Thoreau's picture

There are cheaper and more anonymous outlets than buying directly from the US mint: aka Joe Blow who needs some dough to feed the family.

Jason T's picture

I'm on a waiting list.. well, been on a waiting list for physical silver from my local dealer.  Some 50 deep but am waiting.. shit, since silver was 14 in the summer.

JLee2027's picture

No one should be waiting that long. What exactly are you looking for?

Sudden Debt's picture

expectation of a $45 to $60 silver price before summer 2011:

http://www.marketoracle.co.uk/images/2010/Dec/silver-14-1.jpg

 

 

RobotTrader's picture

QE ready to be unleashed to stick-save the likes of BBVA?

LongSoupLine's picture

uhhhh, curious what that has to do with the subject matter of the thread?...other than QE ultimately raising PM's further.

Bill Lumbergh's picture

Not looking good with that "world record volume"...

LOL

akak's picture

Robot, what are those cryptic abbreviations on the x-axis of that chart --- "Jan", "Jun", "Sept"?  You ought to know by now that it is only HOURS that matter to a real trader like yourself --- nothing beyond a 24 hour time frame!  It's all short-term, baby, SHORT TERM!

aribabak's picture

Why did Harvey Organ's blog used PHYS when it quotes the price of this Sprott Silver Trust ?

Temporalist's picture

Read it again it first uses GLD and SLV and immediately following that uses Sprott Silver and Gold.