07 November 2016

NAV Premiums of Certain Precious Metals Trusts and Funds

As you may recall, The Sprott Trusts continue to add units outstanding in order to acquire more physical bullion under their 'At the Market' Program with Cantor Fitzgerald which was announced on May 6 of this year.

It is certainly was a smart move and a nice change from their prior arrangement with Morgan Stanley which was restrictive and prone to manipulation and arbitrage.

As we have noted many times this year, Sprott is taking affirming action in the markets to add to their bullion position opportunistically.

"The Trust has entered into a sales agreement with Cantor Fitzgerald & Co. (“Cantor”) whereby the Trust may, at its sole discretion and subject to its operating and investment restrictions, offer and sell trust units through an “at-the-market” offering program (the “ATM Program”).

The Trust intends to use the proceeds from any sales to acquire physical bullion in accordance with the Trust’s objectives and subject to the Trust’s investment and operating restrictions. Under the trust agreement governing the Trust, the net proceeds from the sale of any trust units pursuant to the ATM Program must be not less than 100% of the most recently calculated net asset value per trust unit prior to, or upon, determination of pricing of any sales (the “Accretion Condition”).

Given this Accretion Condition, the Trust expects that any sales pursuant to the ATM Program will be accretive to the Trust’s unitholders on a net asset value per trust unit basis and will increase the physical bullion attributable to each trust unit. Sprott also believes that the Trust may realize other secondary benefits from any sales made pursuant to the ATM Program including enhancing the trading liquidity of the Trust and decreasing the Trust’s operating expenses on a per unit basis."
As we all can see, today is certainly a 'risk asset' day with stocks soaring and the metals giving back some of their recent gains.  The financiers and their markets seem to be betting that they get what they want from the upcoming Presidential election.