Sprott Raises Capital To Buy Another 6 Tons ($250 Million Worth) Of Gold

Tyler Durden's picture

The wholesale demand for physical gold continues without reprieve, as the Sprott Physical Gold Trust (PHYS) has just announced it will sell another 22 million units. Use of proceeds: "The Trust will use the net proceeds of this offering to acquire London Good Delivery physical gold bullion in accordance with its objective and subject to the investment and operating restrictions described in the Preliminary Base Prep Prospectus." Somehow we are confident that Sprott, when determining the pent up demand for this trust, is fully aware that gold is not very edible, if at all.

Full notice:


h/t Mike

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Ragnarok's picture

Anyone who wines about the destruction of the premium doesn't understand that in time it will be even higher.


Also, does anyone else notice that PHYS has its biggest moves on days when there is European uncertainty?  Euro fetish for Canucks?

unwashedmass's picture


like someone is going to sell it to him....good luck with that...the IMF blew him off this summer. and where else is he going to find this kind of tonnage? smoke is billowing from the windows of the Comex now. word is they haven't delivered on the June/May contracts yet ...

we're getting to the point if you don't have it, you ain't gettin' any.

frankTHE COIN's picture

Remember back in the early 80s when the Hunt brothers cornered the gold market? The Comex issued an order that all orders now can be "Liquidation only", crashing the gold mkt.

Getagrip's picture

Uhh...that was the silver market...

frankTHE COIN's picture

Thanks for the correction.

hidingfromhelis's picture

The Hunt brothers didn't try to "corner the market" either.  They simply made the mistake of requesting delivery when there wasn't enough silver available to deliver.  Interesting how they became pariahs for trying to call the bluff of a corrupt institution/system.  Deja vu all over again?  Woe to anyone who demands physical delivery of a large amount of contracts.

zaphod's picture

That is not entirely right.

The brothers did not have enough money to purchase all (or even most) of the silver they had contracts for. Instead they purchased a lot of futures contracts on margin and then held on cornering them, without intending to actually take delivery.

The courts ruled that because of this they were "manipulating" the markets. Personally, I don't buy that, but it was the legal logic.

What Soros,Paulson,etc are doing with GLD and SLV is brilliant.

GLD and SLV WILL HAVE ENOUGH MONEY to fully purchase the futures contracts they own. When GLD and SLV call those in, the banks will be busted.

According to the court's legal precedent, this will not be cornering the market.

GLD and SLV will bust the banks, and be able to take legal possession of them in place of the banks failure to deliver.

That is what Soros, Paulson want. To own the banks and the FED.

Freakin brilliant.


That said, individual investers in GLD and SLV will get screwed, that is why I buy PHYS and coins.....

Getagrip's picture

Sprott is pretty smart and has probably already locked in the tonnage (at a higher price). This is short term dilutive to the PHYS trust until the specifics of purchase are known. Bottom line is there is no other trust that will let you take delivery, and the price will only keep going up. I buy units on any weakness. Gaps down at 11.1 need to fill, so I'll look to add in that area when the unit offer announcement is made. Also, he's buying from the London Market..same diff...

Testicular Cancer's picture

Sorry to be impertinent but Has anybody seen Johnny Bravo? I am concerned that he has joined Amelia Earheart, the Lindbergh baby, Jimmy Hoffa, & Elvis & is sleeping with the fishes. Maybe he is in the bottom of a lake with golden boots.

Getagrip's picture

Iindefinite vacation with his S/P winnings...

BobWatNorCal's picture

He already knows you can't eat gold, now he is confirming that you can't wipe yr butt with it.

Will be back when research completes, or so I've been told.

RockyRacoon's picture

He promised that he'd disappear when some parameters were met...  And they were met.

Something about predicting some futures and some gold pricing.

He's dead meat.

bozzy's picture

"Short term dilutive" a good phrase, just inappropriate - like 6 months inappropriate, bringing into question just what it is that the management of the trust are really trying to do, because it is surely not bringing benefit to early investors.

cossack55's picture

where did Thailand get the 10-12 tons they just bought.  Kentucky?

thesapein's picture

Can we assume they're not taking delivery when it's from the IMF?

peterpeter's picture

> Anyone who wines about the destruction of the premium doesn't understand that in time it will be even higher.

That was the logic of every speculator buying pets.com shares in 99... or tulips in Amsterdam.

While the price of Gold may continue to rise, buying it at a premium over what every other gold ETF or for that matter what a bullion dealer will sell you coins for is - well - good for Sprott and bad for the buyers.

Buying because you expect an already rich premium to rise further is just stupid.  This is Sprott's 3rd issuance, and if the premium stays or grows, there will surely be more as it is a risk free arbitrage netting him millions.

Sprott buys gold as the spot, and somehow lumpen-investors have been convinced that they should in turn buy shares at a material premium to the spot price he just paid.  A small premium might make sense for the convertability of the shares and if you value cost of protecting bullion, but the current premium is over $60/oz, which is well above the cost to take delivery and securely store gold by quite a lot....


FranSix's picture

1.  Sprott is the only entity in the gold space offering an ETF that will make good on delivery should there ever be a run on bullion. Considering the smoke coming out of the window of the COMEX, any failure to deliver to the numerous ETFs taking in LBMA bars may eventually be out of luck.

2. Sprott is also set up to buy straight out of the mines.  Write this down.  Gold comes out of mines, not necessarily the COMEX.

3.  A 'premium' to gold investments like coins or bars would be in the area of 60% in a major bull market for gold, not a few sheckles.

BobWatNorCal's picture

"Write this down. Gold comes out of mines"
Riiiiight.....next you'll be telling me that food doesn't come from grocery stores.


FranSix's picture

Pretty funny.  

The thing is, gold is not manufactured solely for the purposes of the COMEX.  Unlike a grocery store, you can't grow it on the farm year after year in plentiful abundance.  

It takes years and hundreds of millions in development capital to set up a mine with a grade of maybe 1g/t.  And you might need to process 30,000 to 60,000 tonnes per day of rock to get decent production rates.

A year's worth of production from the mines trades in four days' time on the precious metals exchanges.  So whatever is being traded on precious metals exchanges the rest of the year, it sure isn't bullion.

RockyRacoon's picture

Whereas, the production of fiat currency takes a few trees and some ink.   And here's the neat part, they can put as many zeros on it as they want!  What a deal.  How else could you take a $300 tree and turn it into a gazillion "dollars".  Now, gold on the other hand...

Ragnarok's picture

By all means if you can, buy physical bullion and take possession.  That being said PHYS offers many advantages to Europeans/Americans (holds gold offshore), 401k/IRA/RRSP holders (can be easily purchased in certain retirement plans).

cossack55's picture

Oh, you mean the 401ks/IRA that the labor dept. just completed their hearings on yesterday so the treas. can seize and convert 401/IRA to UST annuities.  I am really unhappy with this scene.

Getagrip's picture

I have agonized on this. I think I would pull my money out and pay the penalty before I would let the Gov. tell me what to buy...

Bringin It's picture

You might want to get busy then.  If you start taking out some each year, you can keep the tax impact down when compared with taking it all in one tax year.

Ragnarok's picture

It has been a while since this was brought up, do you have a link or anymore information on this matter?

cossack55's picture

No. I can find no info.  Will try the WSJ this AM.

Getagrip's picture

Have you looked at the premium buyers on Ebay are paying? It's about the same...

FranSix's picture

Yes, the coins had been trading something like 45% premium.  Better to get a quote from a coin and bullion dealer first.  But I think a premium on anything before bullion reaches its 40-year inflation adjusted average of $1673/oz. U.S. doesn't mean much.

ArrestBobRubin's picture

The best move for most folks trying to accumulate gold and silver right now is to just buy U.S. Mint American Eagles. Both versions are bullion: .999 fineness. American Buffalo 1oz coins are .9999, or 24 karat. One doesn't have to purchase numismatic or semi-numismatic coins unless one wants to. The premiums on these are much higher. Not saying they don't have a place for many investors, but new Eagles work just fine thank you.

American Silver Eagles (ASE's) are 1oz ea, while the Gold version is available in 1oz, 1/2oz, 1/4oz, and 1/10oz sizes. The premium (dealer mark up over the spot price) goes up as the size goes down, but the smaller sizes mean most anyone can get in on gold and build a little PM stash via monthly purchases. I never buy Silver Eagles on ebay, only b/c everything I've ever seen carries too high a mark up. At these rising prices, you need to save where you can.

I've used a number of dealers but have found www.bulliondirect.com to be best for my needs. They always have Eagles in stock, have the lowest mark up I've found anywhere, and don't keep you waiting for delivery. Another nice benny: aside from taking delivery, one can leave it in their vault- - with no storage fees. Nice to be able to keep some there, that eliminates shipping charges if I want to sell some...

Very reliable operation, great prices. No, I don't work for em!

Silver Eagles are $23.06 each tonight. See if you can beat that, and if so, please let me know where so I can use 'em too.

Blano's picture

I'm not sure I'll see the answer later, but I was hoping you or someone else could answer this.  Forgive me if it sounds naive.

Is there any reason I wouldn't want to buy, say, a 2008 or 2009 Silver Eagle, if they're cheaper than the 2010??  Thanks in advance.

ArrestBobRubin's picture

Blano, especially with Silver Eagles, there is no reason whatsoever not to go with the less expensive item. Good luck.

Blano's picture

I found a place much closer to where I live where I can get the '08/'09's a buck cheaper and was wondering why I wouldn't want to do that.

Thank you very much!!

RockyRacoon's picture

Buy locally only if there is no sales tax!

RockyRacoon's picture

Silver Eagles are generic enough that the year does not matter.  The newer issues get a premium for some collector reason but it's not warranted.

See mintage quantities here: http://silvereagleguide.com/mintages/

RockyRacoon's picture

It should be pointed out that all U. S. bullion coins contain a full ounce of silver.  Gold coins contain the full measure of gold as shown.  The coins actually weigh more than this because they are not pure.

kalum's picture

I may have this mixed up, but I thought the premium was because of a claim that this particular ETF was somehow subject to the stock capital gains rate rather than collectilbles, as  the latter is used for GLD. Am I thinking of some other fund?TIA

Tapeworm's picture

peterpeter, your comment is spot on. As you said, it is cheaper to buy the gold and have it delivered into hand than pay the silly high premium for an ETF.

 Why is this so hard to understand? Oh yeah, glod is something magical.

bozzy's picture

As one such "lumpen" investor since the initial offering I should like to educate your somewhat smug and sorry attitude just a little. Premium or no premium, this instrument has some distinguishing features which may surprise.

First it is supposed to be a closed end fund. If you look up "closed" in the dictionary, (where you may also identify that "whines" is spelled with an "h") you may infer that we might not have expected two yes two further visits to the table within the first 6 months. Further, this is a trust vehicle which apparently does not need or seek permission to do anything at all even "ultra vires" actions by the trustees. Third, if you see negative price correlation with its peers and with the underlying metal in the weeks before a publicly DENIED further visit to the honeypot, it is reasonable to suppose there may have been someone trading the information rather sooner than the rest of the market.

The rich premium to which you refer reached an apparent maximum of around 24%, but now languishes at below 6%. The not inconsiderable difference has gone to fund the underwriting profits from the sale of their previous grubbings. This has nothing to do with tulip bubbles, this has to do with exchange acceptance of maverick offerings where there is no intention to comply with the offer documents, rather to line the pockets of the underwriters, and expand the political objectives of GATA board members. Once in this "honeytrap" the individual investor who may or may not wish to wait a year for a further opportunity to get out has little choice but the bad one: book significant losses, or hold and hope. Last time I stayed and hoped, based on the assurances given to me by Sprott themselves, but having seen the price pick itself up a little once more, I have been devastated to see that last night they DID IT AGAIN!

The conclusions are obvious, but not entirely as you suggest. The fact is that the product is rubbish in that it has produced losses for my portfolio, has not delivered a sou to its early investors relative to gold itself, and is run as a political weapon in the well publicised interests of the Sprott management two of whom are prominent GATA members.

Next time you want to post in here, wait until you are old enough to do the CAPTCHA yourself rather than getting your parents to help just so you can sound off about "lumpen" idiots.











midtowng's picture

I'm not impressed with PHYS so far. I've been an owner of it for several months, and it seems to underperform other gold-based investments.

SWRichmond's picture

Rather than castng some generic and unverifiable aspersion at PHYS, why don't you tell us which "other gold-based investments" you're comparing it to?

Or are you just here to deflect share from PHYS?

midtowng's picture

I'm not "talking my book" if that is what you are trying to say.

If you want a comparison, I own a lot more of CEF, and it has performed better for much of the year. I'm still holding my PHYS for now, but I'll need to see better performance soon.

bozzy's picture

You don't need to look far - any of its peer group ETN's or heaven forfend - even gold itself!

PHYS is a political cause, not an investment - it is a rich man's toy.

DoctoRx's picture

I have been buying when the premium to NAV drops and selling when it is high.  You simply bought high, I would think.  You may be interested in the Trust's summary of the range of how it has traded in relation to NAV:


(scroll down page for full info)

midtowng's picture

I just checked my purchase history and you are right. My timing for PHYS was poor, while my timing for CEF purchases was much better. That has a lot to do with my poor impression of PHYS.

bozzy's picture

Once again - you talk as though nothing could be more normal than that a closed end fund should revisit the table every time there is a bit of premium to reallocate to the underwriters...

Also, the management company's own history as you link it shows how rapid has been the gouging. Apart from a few days after the initial offering, the premium is at a low in percentage terms, because it has been eaten by the parasitic shits who the rich boy uses to gouge his investors - check the price action relative to peersa and metal BEFORE this announcement, and if you don't see insider action you need to see your optician.

cossack55's picture

Then turn it in for paper and ink.