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http://www.theglobeandmail.com/globe...rticle2132411/
The Sprott Foundation, named after Eric Sprott, announced that it is selling two million units of its Sprott Physical Gold Trust (PHY.U-T15.66-0.04-0.25%), worth about $30-million at Wednesday's price.
In its announcement, Sprott said that the proceeds would be reinvested in the silver sector, which isn’t surprising because Mr. Sprott has been touting the silver (SI-FT40.140.320.81%) story of late. But there’s something to be said about what the sale means for gold (GC-FT1,789.004.000.22%). In a recent interview with the GoldMoney Foundation, Mr. Sprott said that “gold was the investment of the last decade,” adding “I think silver is going to to be the investment of this decade.”
Given that view, why wait until now to sell the gold units? Just look at the market price for the Physical Gold Trust. Since July 1, it’s shot up 22 per cent. By selling, Mr. Sprott appears to be taking some money off the table to take advantage of such a drastic spike -- though he does still personally own six million trust units.
Although the foundation announced that it would reinvest its money in the silver sector, it is interesting that it did not specifically say where it would invest, either in Sprott Physical Silver Trust (PHS.U-T18.65----%), or the metal itself. But if you look at Sprott’s recent selling activity, it’s clear that money will go into the metal. In the past month or so, Sprott has sold about $23-million of the Silver Trust units. That comes on the heels of sales this spring worth about $34-million of the trust’s units.
The sales have been pointed out by blogger ‘kid dynamite.’ While he acknowledges that Sprott is reinvesting the money back into silver, he points out that the Silver Physical Trust currently trades at about a 20 per cent premium to the net asset value. By exiting, Sprott captures that premium and then buys the metal at fair value.
Buying the metal ties back to Mr. Sprott’s recent comments about being bullish on silver. In the GoldMoney interview, he pointed out that the physical amount of gold above ground is about 100 times greater than silver, yet people are buying the two metals on a 1-to-1 basis. That means the price of silver has to go up, he argues.
Plus, gold is trading at about 45 times the price of silver. Historically, the ratio has been about 16 times and Mr. Sprott thinks we will get back in line with that number.
But he isn’t sure of the timing. “When it actually happens, I don’t know,” he said in the interview.
http://www.theglobeandmail.com/globe...rticle2132411/
The Sprott Foundation, named after Eric Sprott, announced that it is selling two million units of its Sprott Physical Gold Trust (PHY.U-T15.66-0.04-0.25%), worth about $30-million at Wednesday's price.
In its announcement, Sprott said that the proceeds would be reinvested in the silver sector, which isn’t surprising because Mr. Sprott has been touting the silver (SI-FT40.140.320.81%) story of late. But there’s something to be said about what the sale means for gold (GC-FT1,789.004.000.22%). In a recent interview with the GoldMoney Foundation, Mr. Sprott said that “gold was the investment of the last decade,” adding “I think silver is going to to be the investment of this decade.”
Given that view, why wait until now to sell the gold units? Just look at the market price for the Physical Gold Trust. Since July 1, it’s shot up 22 per cent. By selling, Mr. Sprott appears to be taking some money off the table to take advantage of such a drastic spike -- though he does still personally own six million trust units.
Although the foundation announced that it would reinvest its money in the silver sector, it is interesting that it did not specifically say where it would invest, either in Sprott Physical Silver Trust (PHS.U-T18.65----%), or the metal itself. But if you look at Sprott’s recent selling activity, it’s clear that money will go into the metal. In the past month or so, Sprott has sold about $23-million of the Silver Trust units. That comes on the heels of sales this spring worth about $34-million of the trust’s units.
The sales have been pointed out by blogger ‘kid dynamite.’ While he acknowledges that Sprott is reinvesting the money back into silver, he points out that the Silver Physical Trust currently trades at about a 20 per cent premium to the net asset value. By exiting, Sprott captures that premium and then buys the metal at fair value.
Buying the metal ties back to Mr. Sprott’s recent comments about being bullish on silver. In the GoldMoney interview, he pointed out that the physical amount of gold above ground is about 100 times greater than silver, yet people are buying the two metals on a 1-to-1 basis. That means the price of silver has to go up, he argues.
Plus, gold is trading at about 45 times the price of silver. Historically, the ratio has been about 16 times and Mr. Sprott thinks we will get back in line with that number.
But he isn’t sure of the timing. “When it actually happens, I don’t know,” he said in the interview.
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