Sprott Prices PHYS Follow On Offering, Raises $266 Million, To Buy Over 5 Tonnes Of Physical Gold

Tyler Durden's picture

As was announced before, Sprott's PHYS fund (which previously had not disclosed terms of its offering) has just priced 19 million units at $14.00/unit for a total raise of $266 million, all of which will go to removing another 5 tonnes of physical gold out of the broader lendable circulation.

Full release:

Sprott Physical Gold Trust Announces Completion of Its Follow-on Offering of Trust Units

TORONTO, July 20, 2011 /CNW/ - Sprott Physical Gold Trust (the "Trust") (NYSE: PHYS / TSX: PHY.U), a trust created to invest and hold substantially all of its assets in physical gold bullion and managed by Sprott Asset Management LP, today announced that it has completed its follow-on offering of 19,000,000 Units at US$14.00 per Unit for gross proceeds of US$266,000,000 (the "Offering").

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.  The net proceeds of the Offering per Unit are greater than 100% of the most recently calculated net asset value per Unit of the Trust prior to pricing of the Offering, as required under the trust agreement governing the Trust.

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

This news release does not constitute an offer to sell or a solicitation of an offer to buy the Units, nor shall there be any sale of the Units in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

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Flore's picture

i'd rather go out and buy it myself instead of others letting it buy for me

trav7777's picture

does he let shareholders go into his vaults?

Smiddywesson's picture

Independent audit, twice a year.  Earnst and Young, I think

equity_momo's picture


Id go with the OPer then and buy it myself.  Earnst and fucking Young indeed...

Sprotts Phys fund is for high rollers and funds only if you think about it.

Pladizow's picture

Short of cashing out and paying the taxes - Sprott is the best option for Qualified funds, i.e., IRA's.

Buy physical for everything else!

jackinrichmond's picture

i heard it was the canadian mint that confirmed his inventories

IQ 145's picture

 I would say that this anouncement was more likely to provide a positive tone to the market today than the John Taylor rambling about possible futures. I always like to hear about people taking actions that will make me more profits while I play golf.

equity_momo's picture

Enjoy the Open the other day? Oh to be that good. 7 fig pay days to play....golf. 

Thomas's picture

The only thing that really matters is the sovereigns are buyers not sellers. The rest is white noise.

Sudden Debt's picture

Central banks have about 1.5 trillion in gold all over the world.

There is 3 trillion$ of gold in the world.

There is 1.5 trillion in private hands.


And once they start buying gold and notice there isn't any left. BOOM!

This is a must read article for PM bulls:



FranSix's picture

Depending on whether you're talking short tons or metric tons, the number of ounces varies very widely.

But the amount under consideration is only a drop in the bucket when the entire year's global production of gold sells on precious metals exchanges in a matter of four day's trade.

Sprott is beholden to their unit holders to acquire this gold, and may be obliged to go to the producers if access to the markets is cut off due to heavy demand.

unununium's picture

Yesterday's takedown resulted in a lovely discount for this big physical buyer.

Perfect illustration of how the powerz can be taken out.

DCFusor's picture

"The net proceeds of the Offering per Unit are greater than 100% of the most recently calculated net asset value per Unit of the Trust prior to pricing of the Offering, as required under the trust agreement governing the Trust."


Sounds like a long winded way of saying "we'll only buy gold with part of the money".

KidDynamite's picture

it just means that he won't do a dilutive offering.

does anyone know why he had to pay so much in underwriting fees?  $14.00 offering price, $.56 per share in underwriting fees (4% !!!), $13.44/share net to the Trust

magis00's picture

Whatup KD, I was hoping to track you down about this story -- fitting it should happen here.


So how does this relate to your thoughts about Sprott NOT increasing his physical silver holdings?  As a read-your-posts-for-rational-contrarian-exposure sort of guy, this news makes me more inclined to believe what you're contending about there not actually being such a shortage of silver as one would think/as we're told.


Tmosley, you here? Can we have a battle royale? COMEX is a price-discovery mechanism and won't ever go bust?

KidDynamite's picture

well, it's important to note that this story is not news - it's 5 days old (As i noted in a comment below, which promptly got junked, for accuracy and fact, apparently).  This PHYS offering is what sparked me to finally write the PSLV post that someone linked below..

I have no interest in arguing with silver bugs about the efficacy of the COMEX.

I simply want to point out something that even silver bugs cannot possibly argue with:  it would be good for silver if Eric Sprott bought millions of ounces of physical silver for PSLV's vaults.  Yet Sprott refuses to do so - despite his own constant chatter about physical silver supply/demand imbalances.

It's the Mighty Eric Sprott who is in position to impact the silver market via PSLV - yet he doesn't... because he's made promises he can't keep about not hurting PSLV's absurd 20% premium to NAV.

As I put in a comment on my own blog post, these are the points - silver bulls should be angry with Sprott  - not worshipping him.  He's a big talker, but actions speak louder than words, and he's not doing what he could/should be doing to help the silver bulls:


"1) fact:  Eric Sprott is a vocal silver bull
2) fact: Eric Sprott has commented repeatedly about the nature of the silver market: how there is a "shortage" of physical silver compared to tradable paper silver
3) fact: Eric Sprott's hedge funds own a large amount of PSLV shares
4) fact: Eric Sprott's hedge funds have been selling those shares
5) fact: Eric Sprott is in position to impact the physical silver market, removing millions of ounces of physical silver from the worldwide pool, by doing a secondary offering for PSLV
6) fact:  Silver bulls want Eric Sprott (or anyone else for that matter) to remove physical silver from the hands of those who they deem to be evil manipulators
7) fact: a PSLV secondary offering which removed millions of ounces of physical silver from the hands of the evil paper price manipulating shorts is something that silver bulls want.

rockraider3's picture

Sprott is not beholden to silver bugs.  He is accountable to his investors, and that is all.  Further, he is not required to increase PSLV to take more silver off the market to do right by his investors.

The reality is, if Sprott actually believes the silver shortage exists, he's better off accumulating physical outside of PSLV.  He can buy it much cheaper that way, and under the radar, without alerting the whole world to his actions.

If someone wants to corner the silver market, that could have been accomplished very easily, and getting easier by the day.  That's apparent to anyone that follows silver.  Yet no one does it, even though they could push the price up 100% in short order.  Ask yourself why?  It's so they can accumulate cheaply and anonymously.  Is Sprott doing this?  Probably.  Are other hedge funds doing it?  Almost certainly.  Afterall the goal is to buy low and sell high. Eventually the shortage will be so transparent that the price will increase regardless.  For a patient investor like Sprott, there's no rush to make it happen. 

magis00's picture

For the record KD, just wanted to say that I definitely appreciate your perspective and appreciate you sharing it.  Thanks. I continue to be

a read-your-posts-for-rational-contrarian-exposure sort of guy

And there are certainly a few outlying facts that haven't been explained yet:

  • Yes, conflict of interest with Sprott's hedge funds;
  • Yes, conflict of interest in "maintaining the 20% premium to NAV".

I guess my question in response would be for clarification:  it seems more like you're railing against Sprott as "hero figure", than you are sounding alarm bells about silver shortage.  That is, if he's conflicted himself out of the "hero figure" because he made covenants in the prospectus, that's a different deal than what I read the other day, viz. "maybe Sprott caused it to take months to fill his PSLV-order" (presumably to create an illusion of shortage).

If the first, count me a product of my times and readily willing to cast aside "our Great Men".  Few and far between, they seem to be. (save Tyler, Turd, [Ron Paul!!], etc.)

If the second, I would love to learn more, as that would be just about the most important bit of chicanery in the world, as far as I'm concerned.

Thanks again KD.


KidDynamite's picture

Yes - I find it laughable that Sprott is a "hero figure"... as the commenter above you noted: "Sprott is not beholden to silver bugs."

That's true - and silver bugs need to realize that Eric Sprott, despite his big talk, is doing NOTHING to help bring the silver supply/demand imbalances that HE HIMSELF hypes to a conclusion.

In my opinion, Sprott's goal is to manipulate the silver bugs to get him to do what he wants (ie, buy up PSLV at a 20% premium so he can sell his own shares to them).  If Sprott's goal were to punish The Infidels and the Paper Shorts, he could actually DO that, instead of just TALKING about it...

just to clarify - there are no covenants in the prospectus that prevent him from doing a PSLV offering - he just made promises from onstage at a conference about not harming the premium.


I_ate_the_crow's picture

If you watch the video posted in this thread and reposted below it may shed some light on why Sprott shouldn't be in the business of taking on the Comex. I don't view Sprott as a hero by any means, but his actions and publications are a viable resource in the propaganda war against silver.


This is an information and confidence war that is especially obvious when looking at American politics from 1890-1900. The system has depended on silver being demonetized and ignored as a bubble industrial metal that "costs $5 to dig out of the ground".

The manipulators have unlimited funds and unlimited power to control silver prices. The Hunt fiasco is a testament to what they can do to a small network of investors trying to break the Comex. I know it seems like a good idea for Sprott to put pressure on it, but in my opinion it would be a mistake for he or anyone else to take them on financially, regardless of how well-capitalized he or they may be. They would lose.

On the contrary, there is nothing the cartel can do to stop silver if a majority of the population loses confidence in the system and dollar and once again comes to understand that physical silver is not only money, but the money of the middle class. As economic reality becomes more and more detached from mainstream news people will be more and more amenable to alternative ideas. Unless the gold propaganda wins out, eventually we will reach the silver-singularity moment where hundreds of years of collective conscious supression locks are removed from the spring that silver is sitting on.

The cartel would love to have everyone pile into gold and ignore silver. A few thousand 100-1000oz gold net worthers is nothing. They privately own multiples of gold metric tons and thus will still control the world and any shell reorganization of the international monetary system.

Maybe Sprott is a good guy, maybe he is taking advantage of silver bugs for his own profit. In any event, at this juncture "talking" to small/retail investors about punishing the infidels and the paper shorts is actually more effective and a better, less dangerous strategy to the future of silver prices than "doing".

Sean7k's picture

Fact: 6 and 7 are the same thing. Sprott runs a hedge fund, not a sliver charity. Sprott took those sales of shares and reinvested them in silver and silver mines.

Fact: buying silver shares with a NAV of 20% is not the brightest strategy for an investor. Still, it is not Sprott's fault that vehicles worthy of trust are few and far between.

Fact: Investing your hard earned wealth on the basis of one person's opinion, without due diligence and an investment plan just makes you the next bigger fool.

Fact: anyone that thinks they know what is going on in PM markets and doesn't work for the bullion banks, FED , JPM, HSBC or the London Commodity exchange is an idiot.

Bay of Pigs's picture


Which is why arguing with someone who supports and defends the likes of the JPM, CFTC, COMEX, etc ...(KidD) is useless and a waste of time.

Smiddywesson's picture

this news makes me more inclined to believe what you're contending about there not actually being such a shortage of silver as one would think/as we're told.

Now that would be a diabolical plot by the banksters.  Try to get everyone to pile into silver, knowing that each person buying silver is one less person buying gold.  Meanwhile, the banks continue to amass gold.

Not that I would even entertain such a thought as it would put a target on my back for all the silver bugs.

Libertarians for Prosperity's picture

Isn't it hilarious how Sprott endlessly rants about manipulation in the PM markets, and attempts to distinguish himself as the one billionaire who cares about the little guy, and wants to flush out manipulation by the behemoth banks who control/manipulate everything?

Yet, at the same time, Sprott pays huge underwriting fees to Morgan Stanley who was one of the major banks indicted in 2007 for fraudulent behavior in............the silver market.

Why is Sprott funneling money to the very manipulators he rants against?  Because he thinks the dumb, redneck retail investors who worship his YouTube videos and Max Keiser interviews won't notice. 


Opportunistic hypocrite. 



Manthong's picture

I dunno.. maybe the time is just not quite right yet.

And maybe, there will be a time for privately owned physical metal to define terms, not digital government and bank fantasy metal.

Sean7k's picture

Probably because he has to. There are rules and without a seat on the exchange, you have to use somebody. Haven't you got trolling to do elsewhere?

Zero Govt's picture

Hey Kid Dynamite 

weren't you whining yesterday Sprott on your blog wasn't buying any more physical... seems you opened your big fat empty gob a day early doesn't it?

How are the Crimex, sorry Comex, doing about their metal/paper ratios do you know? Afterall aren't you the wise guy calling other people "ignorant" while focusing on Sprott and taking your eye off the real crooks in this game!

How was your article on the big Silver take-down in May? I wouldn't want an honest Sterling bloke like you delving all day into Sprotts paperwork when the monopolist Silver cartel are getting away with their usual murder

You're pointing the finger at Sprott afterall when the Big Crooks and the asleep at the wheel regulators sit and whistle Dixie Land (sounds like cartel behaviour eh?)

Thanks for banning me from your Blog for pointing this out. Thanks for ignoring JP Morgan are the biggest crooks in the Silver business who were finded $230m this month for rigging the Muni Debt Issuance market. Thanks for ignoring my concerns while you piddle away on Sprott and ignore all the REAL and BIG cartels in the Silver market

It's comforting to know with Kids like you about kidding us all that while you can dish out the criticism (flat as a pancake today and shot yourself in the foot or is it the big fat empty gob you run on?) you can't take it

Rename yourself Kid in Dipers' because you piss your pants when the spotlight is turned on your dishonest little world 

Libertarians for Prosperity's picture

You're a complete and total idiot.

KD was asking why Sprott doesn't add silver, not gold.  In fact, KD even compared the two funds in his post. 

Don't be another dumb, redneck goon... too many of them around here. 


magis00's picture

Hear! Hear! 


Harder captcha's Tyler!

Zero Govt's picture


i suggest you check out what Kid'in'Dipers focuses on... not the Crimex being emptied of Silver, but Sprotts static Silver assets. Yes it's still there, where has the Crimex metal gone while Kid Dick looks the other way??

This moron is getting his nickers in a twist over static inventory while Americas metals exchange is being emptied!

Kid'n'Dipers is throwing his dummy out the pram about asset to share price when we've just seen the biggest take-down in Silver in 30 years. 

Not 1 but 2 big subjects where Kid Dik-hed focuses on absolute trivia while the big bad cartel crooks make off with fleecing investors and leaving yet another fraud behind them

When you call me a "dumb redneck goon" and Kid-Peanut-Brain called me "ignorant" yesterday I'd just like to focus your attention that you're both talking out your arseholes. You'd make good audience members for The Jon Stewart Show, he does the same.. the day Obumma robs peoples pensions he's focusing on who the hotel maid claimed gave a blowjob

You're fuking cretins but i'm not going to hold that against you (just yet)

KidDynamite's picture

ahhh. so you are the idiot I banned for inability to actually debate ANY of the facts in my post.  Congrats - you're the first ever.  Facts. they're a bitch, eh?

sorry - I won't be debating you here either - i have to run - going to volunteer with my dog (therapy dog) at the nursing home.  Much more rewarding than intellectually thrashing monkeys like you.  good luck.

and seriously - I am legitimately embarrassed for you, that you don't understand the difference between PHYS (which this post is about) and PSLV (which my post was about.)... it even underscores my point more. 

Zero Govt's picture

Kid n Dipers

yes i'm the "ignorant ..idiot" you banned from criticising you because you're such a baby you can't handle being under the spotlight yourself... and you admit today it wasnt your Moderator that banned me but you, so lying yesterday and caught shifting the blame exposed, what next eh? ..i'm betting a lot

so it's my "inability to debate ANY facts"... well it was YOU that narrowed your debate to 1 subject only, Sprott. It's YOUR inability to debate ANY facts that is at question. A 2nd shot in your own foot from the muck-raking Ronald McDonald of investment advise

Facts are a bitch aren't they: how about Sprotts Silver assets being static (ie. it's like watching paint dry) and the Crimex Silver disappearing faster than the alcahol section in a Gangsta raid on a corner shop? You're getting your nappies in a twist over watching paint dry while your kid bro makes off with your packed lunch!

Let's focus on Sprott doing nought wrong and saying everything right while the Comex gets emptied of its Silver, the CME takedowns the Silver price and fleeces investors and JPM/Dimon/Blythe say a big fat fuking zero about the entire sham. Why aren't you on that case oh self-annointed consumer champion?

I asked you a question yesterday: do you prefer to deal with Sprott or the reputations Blythe/Dimon/SLV have earned? ...and the answer is??

When you called me "ignorant" i retorted you'd made a wild (ignorant) assumption i owned PSLV (not true). You assumed, you speculated and wrong again peanut brain

as for "intellect" and "thrashing monkies" you've got the biggest Silver cartel acting like the monopolist price-rigging crooks they are and you're focusing on Sprott who has done zippo wrong, diddly squat. You're trying to invert, pervert and divert the truth (and heat) from the real criminal cartel behaviour that's happening yet again in the Silver pit right in under your crooked little snotty nose. Got a word to say on that Kid? 

And don't worry your little head about "legitimately embarrassing me" mate, you can expose yourself in public for lying, making false accusations and trying veinly to stir up a shit storm over nothing all by youself being the muck-raking little JPM shill you are 

Have a nice day troll, don't trip up and fall in your own BS as you leave, you've been too fuking funny already!

lix333's picture

Someone should ask Sprott why hes not buying silver for his pslv fund. Hmmmm...

JohnG's picture

There was a follow on to PSLV not long ago.

KidDynamite's picture

that is incorrect. there was not.

JohnG's picture

you are right, see below.

And you are a dick.

KidDynamite's picture

i know i know - facts hurt...  I simply pointed out that there was no PSLV secondary.  It's a fact.

JohnG's picture

Doesn't hurt, and I acknowledged that you are right.

I believe Sprott will add in November.

I also believe you are still a dick :)

Jumbo Shrimp's picture

Sprott can't buy silver until the Trust is 1 year old (ie., October) via Prospectus.


magis00's picture



Is this our answer?

KidDynamite's picture


Sprott can do a secondary via prospectus any time he wants.  He can file a shelf after a year.

The PHYS offering was done under a shelf - and it sliced about 50% off the PHYS premium...

also note that Sprott did TWO PHYS secondaries in the first several months.

Zero Govt's picture

well done Kid Dynotripe, you've noticed Sprott adding Silver. Has he taken any away? Like Crimex are doing?? So Sprotts Silver holdings are static. Fuck me what a worry! Could there be something much more to worry your little head over, er like Crimex Silver disappearing at a rapid rate???

Strange how you get your nappies in a twist over static inventory at PSLV but not a squeek about looting at Crimex don't you think? I'm not going to call you a paid shill, troll or shit stirring little toe-rag because i just know you're on investors side and fighting the good fight. Arent you mate?

Now for your next post: The Silver Cartel: how Dyno-Muppet exposed the mortgage fraud, Muni Bid Rigging, Silver cartel parasites of **guess who?** .. i know you our Consumer Champion (self appointed) is going to pull a 'winning' expose out the pan (unlike the dead blanks you're coming up with on Sprott)

pmn's picture

Once again, there was stunningly blatant paper manipulation in the silver market on Tuesday. 250 million paper ounces of silver – $10 Billion dollars worth – was sold into the market in one minute. As our friend Brother John disects the crime he notes, “The Comex is a completely and utterly corrupt market.”


check out the vid:



Zero Govt's picture

"Once again, there was stunningly blatant paper manipulation in the silver market on Tuesday... our friend Brother John disects the crime he notes, “The Comex is a completely and utterly corrupt market.”

Good question. Well our resident consumer champion, resident intrepid reporter and resident shitstorm out of a grain of sand, Kid Dynoshite must be right on that story... where are you kid?

Hey Kid, aren't you up in arms about this??

Helloooooo?!!! ...anyone know where our moral crusader for truth has gone????

What you mean Kid Dynomuck fuked off to see if he can dig some dirt on Sprott coz he's firing on blanks!!

Silver Bug's picture

Keep up the good fight Eric, one of the true Gold and Silver Vigilantes.



Quintus's picture

"....which will go to removing another 5 tonnes of physical gold out of the broader lendable circulation."

That's about 500 tonnes of paper gold coming out of the market then.  Leverage works both ways.