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