Pardon my ignorance, but the Sprott deal...

[Ireland_925]

Pardon my ignorance, I'm trying to learn this market but with all the other "day-to-day stuff", it's slow. But, I thought this recent drop was interesting compared to the recent deal with Sprott. Again, forgive my terminology when I describe what I'm thinking, I'm not yet familiar with all of the business/investment terms.

Anyway, Sprott recently declared to "buy" $1.5 billion in silver, which many took as he had actually bought $1.5 billion in silver and emotions ran high for a nice upswing in the POS. However, from what I read from more informed people, this deal was not an actual buying of that quantity of silver, it was a notification (to whatever agency that mandates a record of intent to buy in the markets) that he had the intent (after filing a "legal" right) of buying up to that quantity of silver over a given timeframe. But, he had no obligation to buy that amount (or any?), only that he made it "publicly" known that he buy up to that amount.

So... my overall question is did Sprott see a huge buying opportunity in the near future and make a huge "legal declaration to buy" just before the POS made another big "correction"? In other words, I am curious if Sprott declared to possibly buy because he saw a huge dip in the near future. It would seem very bullish and opportunistic for this to happen, as I see it anyway. Other takes? Criticism welcome.

[68Camaro]

I think you're thinking too hard. Sprott had pre-announced this plan many weeks before. The submission of the paperwork was just the formality of it. To create the initial PSLV fund his people had to look far and wide for weeks to accumulate 500M worth (with silver roughly 2/3 of today's price). The latest annoucement was required notice so that they could expand as they see fit, and as investors support it. They will not advertise in advance when they will be buying.

[exbingoaddict]

So... my overall question is did Sprott see a huge buying opportunity in the near future and make a huge "legal declaration to buy" just before the POS made another big "correction"? In other words, I am curious if Sprott declared to possibly buy because he saw a huge dip in the near future. It would seem very bullish and opportunistic for this to happen, as I see it anyway. Other takes? Criticism welcome.

I'd chalk this one up to even a blind squirrel trips over a nut sometimes. SEC filings don't just happen overnight. Don't be shocked if they or someone else will tout their own horns as market geniuses though. Again, remember the blind squirrel.

[SoFa]

If Sprott buys a billion, someone else is selling it. It's not that bullish.

And he would be buying it to sell shares in it. It's not like he's so excited about silver that he's running out and buying billions. He's buying it to make the fees from his shareholders.

[68Camaro]

If Sprott buys a billion, someone else is selling it. It's not that bullish.

And he would be buying it to sell shares in it. It's not like he's so excited about silver that he's running out and buying billions. He's buying it to make the fees from his shareholders.

Sure, it makes no sense that someone taking 2 billion in silver out of the market (counting existing fund) might affect the price.

[SoFa]

If Sprott buys a billion, someone else is selling it. It's not that bullish.

And he would be buying it to sell shares in it. It's not like he's so excited about silver that he's running out and buying billions. He's buying it to make the fees from his shareholders.

Sure, it makes no sense that someone taking 2 billion in silver out of the market (counting existing fund) might affect the price.

One could argue it's actually a big dump of silver on the market.

We don't know where he's buying it from. It might not have been on the market up until now. He said it was hard to find enough silver last time, so that probably wasn't stuff on the market already.

And he's buying it to sell it on the stock market. So all of a sudden there will be a billion dollars of additional silver available to investors.

[Lemon Thrower]

sprott filed paperwork so he could do a deal at some point in the future. its a shelf registration statement. very routine - its meaningless.

[68Camaro]

sprott filed paperwork so he could do a deal at some point in the future. its a shelf registration statement. very routine - its meaningless.

Perhaps you mean that Sprott is not obligated to act, which is true. But meaningless? It's a required step if he is to act, so I attach meaning to it. He has declared that he is simply waiting for sufficient investor interest to expand. I see no reason to believe that he would NOT continue to expand on a successful concept.

[theo]

sprott filed paperwork so he could do a deal at some point in the future. its a shelf registration statement. very routine - its meaningless.

Perhaps you mean that Sprott is not obligated to act, which is true. But meaningless? It's a required step if he is to act, so I attach meaning to it. He has declared that he is simply waiting for sufficient investor interest to expand. I see no reason to believe that he would NOT continue to expand on a successful concept.

Keep in mind what Sprott, Butler et al have been saying about physical silver and price suppression. Although the process/paperwork seems pretty routine, Sprott seems to be using it to send a message to JPM and co. Every ounce he buys means that much less physical bullion available to satisfy those investors who decide to stand for delivery.

[beauanderos]

sprott filed paperwork so he could do a deal at some point in the future. its a shelf registration statement. very routine - its meaningless.

Perhaps you mean that Sprott is not obligated to act, which is true. But meaningless? It's a required step if he is to act, so I attach meaning to it. He has declared that he is simply waiting for sufficient investor interest to expand. I see no reason to believe that he would NOT continue to expand on a successful concept.

Keep in mind what Sprott, Butler et al have been saying about physical silver and price suppression. Although the process/paperwork seems pretty routine, Sprott seems to be using it to send a message to JPM and co. Every ounce he buys means that much less physical bullion available to satisfy those investors who decide to stand for delivery.

As well, he made presentations to 19 CEO's of the various silver miners to present a case encouraging them to hold money in the form of silver instead of rushing to release production into a suppressed-price market. If even a few do that, it will initiate a bottleneck in supply, which could result in higher prices, which could create a virtual self-reinforcing feedback spiral of further price rises. For those who don't get shaken from their conviction, and weather this temporary pullback, rewards await.

[Lemon Thrower]

its meaningless.

it used to be that when you filed a registration statement, a securities offering was imminent.

they changed the rules about 6 years ago. now, it no longer costs anything to file a shelf registration statement, and doing it in advance means its done when you do come to the market.

its no surprise that someday he'll offer more units of PSLV, but the fact that he filed this registration statement is meaningless.