10 December 2013

NAV Premiums Of Precious Metal Trusts and Funds - Sprott Gold Has 19,200 Ounces Redeemed

Premiums on the gold and silver funds remain depressed, show little sign of any short squeeze.

Interestingly enough another 19,200 ounces of gold bullion were redeemed from the Sprott Gold Trust. Apparently the premiums on physical gold make this an attractive proposition. There is no leverage in the Sprott fund that I can determine, so I doubt it is a risk factor that prompted the redemption.

Physical gold bullion is in tight supply judging by a number of factors including the forwards rates and the inventory levels at the ETFs and exchanges.

If I had unallocated gold at a dealer or a bullion bank, I would be inclined to move it to a storage only facility where I had very clear title and access if it was a long term holding.

And based on my own experience I am not sure I would trust an active bullion bank or dealer with the storage of even allocated gold. MFGlobal showed us how 'sacred' customer assets can be when the biggest claimants start lawyering up.

If the rehypothecation in the gold bullion market starts unwinding quickly it could get a bit muddy with cash settlements and crossed claims.