Sprott Physical Silver Premium To NAV Hits Fresh All Time High

Tyler Durden's picture

Several days ago there were a few rather amusing anecdotes in the blogosphere that just because Sprott filed a selling shareholder shelf in PSLV, the ETF was about to crash and burn. What was not disclosed is that in 2011 there have been about 200 comparable shelves filed for public companies, yet nobody called for the imminent anihilation of 40% of the S&P. Stunningly, just because someone requests the right to sell an asset they own when said asset is trading at all time highs, apparently does not mean they intent to exercise said right. To wit: the premium to NAV for the Eric Sprott physical silver ETF just hit an all time record of 23%. We are confident that this is due to JPMorgan being massively long the metal, and also because anywhere one walks these days, physical silver lying on the ground is more prevalent than dog excrement. Also, those who decided to play the premium-NAV compression trade, are advised to promptly close it unless, of course, they are a TBTF bank.

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Paul Krugman's picture

Silver is breaking out here folks. Straight shot to 40 in my opinion.

unwashedmass's picture

LONG AND STRONG SINCE THE FIRST DAY THE PUBLIC COULD BUY.

FUCK YOU JPM. FUCK YOU.

Cash_is_Trash's picture

$40 would make my day!

Fuck JPM, switch from SLV to PSLV; it's highly recommended.

Sprott is the shit.

DarkMath's picture

PSLV, SLV, what's the difference?

PSLV - Sprott will rape you in premium

SLV - JPMorgan thanks you for allowing them to take your Silver to satisfy their massive Short liability (by using newly printed Fed dollars silly; to buy baskets of SLV silver and temporarily satisfying their Short obligations).

Unless you can hold it you don't own it.

BUY PHYSICAL everyone.

 

Pladizow's picture

Agreed, physical when possible.

But for qualified retirement accounts I choose PSLV.

MaxVernon's picture

My local "real money" store, if you will, is now selling Canadian Maple Leafs at $40.20 per, with a 2+ week lead time.  And they buy directly from the Royal Canadian Mint in bulk.   Can you say silver shortage?  I knew you could.

http://www.gatewestcoin.com/markets.html for anyone interested.

Oh, and nice tits btw!

Cash_is_Trash's picture

Pladizow,

I can't read this shit with that massive supple rack avatar at work.

; )

doerr's picture

Speaking as a former SJR student running dikes, I would say that having Gatewest as a "local coin store" would be one of the few reasons to think of Winnipeg as a good place to live when the winter wind is blowing down Portage Ave.

sullymandias's picture

When I was first driving in to Winnipeg on the bus, I overheard two natives talking to each other. The guy said, "Are you going to Winnipeg? Last place on Earth!"

 

I soon found out what he meant on my 8 hour stopover there.

Drachma's picture

I'm picking up pre-orders of Maple Leafs, Rounds at a premium discount. Delivery time; 3-6 weeks. Premium for silver coins is typically around 16% in my area, but on pre-order my dealer will take 8-10%. Gold coins vary from 3-6% premium. RCM was recently advertising only a 1 oz. wafer for $1545 when spot was in the $1350 range. They have no silver bullion coins now. Only collectibles and commemoratives.

Oh, and I agree, those are great titties.

Sophist Economicus's picture

Physical is best -- BUT, when you add in the premium over spot for a bullion coin, postage and storage/security (be it at home or elsewhere), an NAV of 15% or so isn't outrageous.    Also, the market is liquid for PLSV and it sets the NAV (not Sprott). Wait for times when the NAV is reasonable to buy. 

 

 

Besides, unlike physical, the premium to NAV doesn't go to zero -- so chances are you'll recoup some of it.   If it ever trades at a discount, well, that would be a screaming buy, wouldn't it

 

KevinB's picture

CEF traded at a discount for years, and was uniformly ignored.

Dr. Richard Head's picture

Judging by reading Turd Ferguson, the $36 mark seems to be as precious (pun intended) as the last mark of $25.50.  Pretty significant rise after the $25.50 mark was breached and contained, so I anticipate a similiar rise after $36 is sustained. 

Golden monkey's picture

I would not fuck JPM but, if they don't mind, they can kiss my ass.

DarkMath's picture

I would fuck Blythe Masters. Seriously, I would fuck her. I'm not kidding.

tmosley's picture

Your dick will have a look of terror, like your avatar.

Then it will probably melt off.

KinorSensase's picture

Agreed.  There's something about a powerful evil woman that's an undeniable aphrodesiac.  I assume something's wrong with me for thinking that.

SilverRhino's picture

just broke 37.00 this morning.

billwilson's picture

Because the JPMOrgue is buying so it can redeem and pay off its shorts. Such is the true price of unavailable physical silver.

SilverBaron's picture

Not to mention the need for more tomahawks to bomb Gadaffi out of his gold and oil.  More explosions = more silver that will never be seen again.

xPat's picture

Tyler, repeat after me:

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

PHYS IS NOT AN ETF. PSLV IS NOT AN ETF.

 

Dude, they are both closed-end funds, not ETFs. Get it?

xPat

markmotive's picture

Won't Sprott issue new shares at the NAV...not the market price?

Cash_is_Trash's picture

Good question.

So can the shares be diluted by a secondary offering or does that counter what xPat says?

43 Steelie's picture

Yes they can. He did for PHYS around $11.30 when it was trading closer to $12.00. However, he called that move a big mistake and said he wouldn't do it again.

Although, with how strong the demand is and how much Sprott would love to see more physical removed from the market, I'd be surprised if they were not in the process of doing a follow-on offering here. No one knows at what premium though. 

In any case, unless you have an IRA or another illiquid (without a huge penalty) vehicle why wouldn't you just buy physical at a less than 10% premium?

Pegasus Muse's picture

Eric Sprott said in a recent King World News interview he would not dilute existing shareholders by doing a follow-on offering of shares of PSLV.  He said he “learned his lesson” about doing that after the PHYS follow-on offering fiasco.  

If Sprott goes back on his word I will be done with him and his firm.

If Sprott wants to take more physical gold and silver off the market he can create new physical bullion trusts -- call them PHYS II and a PSLV II.  

If he does another follow-on offering --- after he said he would not --- he will lose the trust and confidence of a lot of investors.  A money manger's word is his bond.  

43 Steelie's picture

Fair point. I would agree with you.

KidDynamite's picture

not to belabor the point, but creating PSLV II would be the exact same thing. After all, assum he creates PSLV II and satiates some of the demand, so it only trades at a 10% premium to NAV.  Are any of the PSLV I holders really not going to sell their PSLV 1 at a 24% premium and buy PSLV II at a 10% premium?

tmosley's picture

He could, but this way he is not the one pocketing the premium.

My guess is that the same thing would happen as happened with the first follow-on offering--the premium would plunge, and then go right back up as people continued to buy more.

GoinFawr's picture

So SLV is definitely the way to go, right KD? 

http://abstrusegoose.com/348

 

vas deferens's picture

Issuing more shares and keeping the same amount of silver would dilute shareholders but that is not what Sprott did with PHYS.  There are the same amount of shares to physical gold and NO DILUTION of PHYS.

Creating PSLV II, with the same prespectis, would have the same effect as adding silver and more shares to PSLV. 

If you own PSLV in a taxable account sell it, take your premium, and buy physical!!  If Sprott has a secondary offering, to me, that would be wonderful;

1) Taking more physical off the mkt.

2)lowering the premium hopefully low enough I have a nother option to buy silver.

Diogenes's picture

As an owner of Sprott's gold fund I would not mind if he did a follow on offering PROVIDED he offered the shares to existing shareholders, at cost.

Flakmeister's picture

If you will not ever be in a position to take physical delivery, sell your PSLV, recoup the premium and buy CEF....

Obviously if you intend to cash in one day...

vas deferens's picture

Yes, but he can set any price and it will not be NAV. He will also need the physical silver.  

Sprott issued a secondary offering on PHYS (his gold trust) when there was around 20% premium.  Sprott priced the secondary offering around 10% premium making the PHYS fall to near the new issuing price.

 

 

BrianOFlanagan's picture

proof that there is no limit to the stupidity of retail investors.  

Apostle of Unknown's picture

yup. People who buy at 23% premium are absolutely nuts. Might as well give that to VAT and have the real physical stuff. (I can already picture the replies: "if you can buy it"... well, last time I checked I could)

Fenlander's picture

Serious question from me.  I own physical, and am not interested in paper having done my research a couple of years ago when I woke up to what was going on in the world.  But from what I have read, Sprott's fund is fully backed, and one of the things it offers investors is confidence of ownership, without the expense of storage or worry of it being stolen.  But at what point does the premium over NAV get so much that people either just buy and install a safe at home, or bury it very well?  I'm not talking about hedge funds or mega investments, but regular individual investors.

43 Steelie's picture

I think it's a good question and you're right about individual investors..there is no reason anyone with less than $1MM in assets should be buying into it at such a high premium. 

The best part about the fund is that you can exchange it for physical. But you would need close to $400K invested to make it work. 

The fund garners a premium for a few reasons:

1. Assets are held outside the U.S.

2. Don't have to worry about storage costs

3. Can exchange shares for physical

4. I'm assuming most holders of it don't day trade it so liquidity and turnover is fairly low meaning those that would sell would only sell at decent enough premiums

5. Day traders who aren't looking at the premium but rather only that day's + or - percentage in underlying silver spot price and assigning it blindly to PSLV

Apostle of Unknown's picture

For me the ultimate criterium is Value Added Tax in my country, storage costs should be negligible for the average retailer.

If you want a closed fund, let's compare Sprott with CEF. CEF is 54.9% silver and 43.6% gold. If we make a similar mix using Sprott's current intraday premiums, we get (54.9% * 24.94) + (43.6% * 6.14) = 16,36%. The CEF(US) premium is currently 8.5%. This makes Sprott ridiculously expensive and in my humble opinion only a retard would not switch at this point.

Montecarlo's picture

I purchased PSLV with a self-directed IRA spun off from my 401K.  No other way to access the money...

mraptor's picture

All of you guys complaing about 23% markup, chill out ;).. yes it is a big premium no doubt, but it is generated primary by the day-traders....

As many mentioned here , they are relucant to buy... and I gather that most of the ppl on this site are long term holders..

So yes 23% is big premium, but we will see even bigger premiums in the future, when the ppl pile up...

Buy on the dips and lower premiums.. otherwise just trade it..

duo's picture

CEF used to issue new units every quarter or so.  They stopped doing that, probably because they couldn't find any physical silver.  Telling.

CEF premium now over 7%, per Harvey.

Xibalba's picture

Sprott needs to issue a secondary and stand for another delivery.  Crash the Death Star!

Bastiat's picture

physical silver lying on the ground is more prevalent than dog excrement

That's what people are picking up with those little plastic bags!