Earlier we reported that Sprott had sold $35 million worthof PSLV, which caused many to panic that the precious metals guru hadindicated the market top in the market. Well, as it turns out and as hejust told the Globe and Mail “We haven’t lost our enthusiasm for silver.” Quite the opposite...
So why the sales? “Every dollar of money that was raised by selling shares of [the Trust]... was reinvested in silver or silver equities,” he said.
Whilesilver’s price per ounce has soared in recent months, “silver shareshave not done as well, which is almost shocking in a way, and it lookedlike there were opportunities in either getting some premium on PSLVshares and buying silver or buying silver equities.” The sales were madeat an average price of about $21, up from their $10 IPO price about sixmonths ago.
But that doesn’t mean Mr. Sprott is abandoning histrust. He says he still holds around 25 per cent of the total trustunits between his funds and his charitable foundation.
As forfuture public offerings following the IPO, he says he is sticking to apromise he has already made. “There will not be an offering thatnegatively impacts the premium on the PSLV,” he said.
Sprottis not the first to observe the harsh push on silver equities. As wenoted some time ago, metals are outperforming equities by a ridiculousmargin, which is why anyone who has to have a connection with capitalmarkets (like an advisor) would be foolish not to take advantage of thisrelative mispricing. Which by the way is massive. As the chart belowshows, while SILV is up 42% YTD, the SIL ETF is actually negative for the year!All Sprott is doing is taking profits from the upper line andreinvesting them in the lower one, once again proving that relativevalue compressiona/divergence trades are the only ones that make anyremote sense under a centrally planned regime.
https://www.zerohedge.com/article/so-much-sprott-silver-scare-every-dollar-pslv-sales-was-reinvested-silver-equities