Sprott Silver Trust Article

[exbingoaddict]

Not endorsing an investment in this (or any other) fund. Found the article interesting for two take aways. 1) The tax treatment of the Sprott Trust and 2) the option to redeem for physical silver. Thought I'd share.


http://seekingalpha.com/article/549931-a-rare-opportunity-for-slv-investors

[SoFa]

MaybI might consider it when PSLV trades at a discount to NAV. I think it will happen someday.

[Silver Addict]

MaybI might consider it when PSLV trades at a discount to NAV. I think it will happen someday.

Don't think that will happen. If it did, it wouldn't last long.

Let's say it trades for a 5% discount to NAV. Someone could buy a bunch of shares at the discount, then redeem for physical metal.

How long do you think that would go on?

[68Camaro]

Unpredictable temporary negative spikes aside - if someone dumps a load during a period when few are paying attention - it will always trade at a premium to NAV. The only question is the level of premium.

[PMLurker]

Thank you for the link. I don't think the author of the article read the prospectus or they at least left off some interesting tidbits of data regarding redemption. Redemption for physical is not likely for the average reader of Seeking Alpha as one would need to take out at least 10,000 toz.

Page 55: http://www.sprottphysicalsilver.ca/docu ... tus_US.pdf

"Redemption requests must be for amounts that are at least equivalent to the value of ten London Good
Delivery bars or an integral multiple of one bar in excess thereof, plus applicable expenses. A ‘‘London
Good Delivery bar’’ weighs between 750 and 1,100 troy ounces(approximately 23 to 34 kilograms) and
usually are approximately 1,000 troy ounces. Any fractional amount of redemption proceeds in excess of
ten London Good Delivery bars or an integral multiple of one bar in excess thereof will be paid in cash at a
rate equal to 100% of the NAV of such excess amount.
... in-and-out fees charged by the Mint at $5 per bar and estimated delivery expenses at
$0.50 per troy ounce,..."

Granted, if one would own this much physical silver, they would need to find a safe secure location to keep it. I do not know what the costs of this would be, though I'm sure many people here on the forum would be happy to store someone else's 10,0000toz of bullion for a small fee or at least be competitive to Mr. Sprott's fund.

[68Camaro]

It will still retain value because of that policy, regardless if low level investors can exercise, because the larger investors will keep the demand for it up on par with physical. And it will command a premium because of the greater liquidity. JMHO