NAV Premiums of Certain Precious Metal Trusts and Funds

There is a  'risk off' flight to safety in the markets today.

The unusually high gold to silver ratio seems to reflect this undercurrent.

Gold is somewhat preferred to silver in a 'flight to safety scenario.'

I ascribe this to silver's 'industrial component' which represents about one half its valuation.

But with its much higher than normal volatility, the beta of silver will often prompt silver to 'catch up' and pull forward rather quickly.

Today, for example, both metals are up by the same percentage, for example.   Silver may start rising more quickly if the 'inflation' component of the market risk starts advancing more quickly than the geopolitical risks.

Note that Sprott has acquired the Central Fund CEF and changed the manner of reporting its NAV to conform to the Sprott asset funds model.

Wall Street may be propping the stock indices a bit into the European close, as is sometimes their custom.  Let's see how things go into the close today.

Trumpolini has the markets on edge with his taunting of Russia over missiles and Syria.

Net Asset Values of Certain Precious Metals Trusts and Funds

It has been a while since we have had a look at this.

It is odd to see the relative 'bearishness' on silver. 

The gold/silver ratio is very high, and the discount on PSLV is more than normal.

All things being equal, silver would seem to be a screaming buy here.

However, this may highlight that gold is being favored as a 'flight to safety' asset, and that there are deep underlying concerns about the US economy and financial system.

As a reminder there will be a precious metals options expiration on the Comex this Thursday the 22nd of February.

NAV Premiums of Certain Precious Metal Trusts and Funds

"Man does not control his own fate. The women in his life do that for him."

Groucho Marx

Net Asset Value Premiums Of Certain Precious Metal Trusts and Funds - Smokin'

"Here Homer with his nervous arms
Strikes the twanging harp of war,
And even the western splendour warms,
While the trumpets sound afar:
But, what creates the most intense surprise,
His soul looks out through renovated eyes."

John Keats, Ode to Apollo

There is an obvious safe haven trade in precious metals, notably gold, and US Treasuries this morning as the accumulation of political and geopolitical risks have finally penetrated the consciousness of the denizens of the markets.

The stock indices I track have not yet violated any major trendlines to the downside.   I am watching this carefully.

I have a largish short position on stocks and long gold in my trading account.  But so far this looks like just a trade and not yet a trend.  And so I have peeled that short back a bit this morning and taken the profit.

Note the subdued variance to NAV exhibited by these funds and trusts below.

NAV Premiums of Certain Precious Metals Trusts and Funds

Plus ça change, plus c'est la même chose.

NAV Premiums of Certain Precious Metal Trusts and Funds

The discount to price continues to be tight for Sprott Gold, moreso than Sprott Silver.

NAV Premiums of Certain Precious Metal Trusts and Funds

Sprott Offer For Central Fund of Canada Press Release dated March 8

Sprott Asset Management LP (“Sprott”), a wholly owned subsidiary of Sprott Inc. (TSX:SII), today announced that it has filed an application (the “Application”) with the Court of Queen’s Bench of Alberta (the “Court”) to formally commence proceedings which, if successful, would result in the Class A shareholders of Central Fund of Canada Limited (“CFCL”) (NYSEMKT:CEF) (TSX:CEF.A), effectively, exchanging their Class A shares for trust units of a newly-formed Sprott Physical Gold and Silver Trust (the “New Sprott Trust”) on a net asset value (“NAV”) for NAV basis pursuant to a plan of arrangement (the “Arrangement”). The aggregate value of the proposed Arrangement is approximately US$3.1 billion and stands to unlock $304 million in shareholder value as a result of CFCL’s persistent discount to NAV.

The New Sprott Trust would be managed by Sprott and be substantially similar to the existing Sprott Physical Gold Trust (NYSE Arca:PHYS)(TSX:PHY.U) and Sprott Physical Silver Trust (NYSE Arca:PSLV)(TSX:PHS.U) and would include Sprott’s best-in-class physical bullion redemption feature.

NAV Premiums of Certain Precious Metal Funds and Trusts - Front Running

For those of you who wondered why there was such concentrated selling in the mining stocks a few weeks ago, perhaps this latest bear raid on the precious metals provides an adequate explanation.

See the second chart below.

As a reminder, Non-Farm Payrolls this week, and the FOMC the next.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

NAV Premiums of Certain Precious Metal Trusts and Funds

It appears that there have been some additional share redemptions for physical gold in the Sprott Trust.

The gold/silver price ratio is 69.4.

NAV Premiums of Certain Precious Metals Trusts and Funds

Slightly negative across the board, so it would be hard to support a position that the market is over-enthusiastic or overbought in the short term.

The cash levels and shares outstanding for the most part have all changed since the last time I calculated this in November of last year as one might expect.

The prior report on this is below.

Credibility Trap: Deny and Defy

In the overnight action, prices have marked out where they will be going.

As for today, those powerful few who use public and private resources to twiddle the markets in the short term, and quite a few other data metrics as well, are giving their brethren who were caught offsides by last night's election a chance to square up and get ready.  That's what they do.

They bought the SP 500 futures for stocks, and sold paper gold and silver for the metals.

And they wished to send all the rest of us a message—  vote all you like, but we are still in control.

Being an insider means never having to say you are sorry, or mistaken.   You do not have to, being a true ubermensch and a member of the right sort, from the right schools and with the right connections in the masterful power elite.

You cannot be wrong, ipso facto, because you rule by virtue a claim to a natural worthiness and superiority.  To admit error is to deny yourself as you wish others to perceive you to be.  And you become ever more deeply mired in frauds of every kind.

That is the credibility trap.

However, let us not mistake this bravado from the Wall Street globalisation project and the system of calculated inequality for what it really is.

They were wrong on the election,  they are wrong on money, and they have been wrong on the economy for far too long.

They have been  compounding their errors as they go, almost compulsively down a selfishly dangerous path, because it benefits them and their patrons financially, and they do not know what else to do without admitting that they were wrong.

We have seen worse, even in my short lifetime, and certainly in that of our parents and grandparents.

This is the point where you find your 'inner man,' to borrow a time worn phrase, and carry on because it is your obligation and your calling to do so.

And for those with a comedic or cynical bent, the next four years will most likely be a treasure trove of material on the borders of absurdity.

That is my take on this.  And being just a man, with all that implies, I could be wrong.

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.

NAV Premiums of Certain Precious Metals Trusts and Funds

Sprott continues to add units for cash and metals.

CEF has decreased their cash and the number of units outstanding since the last time that I noted their holdings.

I did not see a recent press release with regard to any buying back of units for cash.

NAV Premiums of Certain Precious Metal Trusts and Funds

The Non-Farm Payroll activities seem to have kicked off earlier, compliments of a stronger dollar and the shenanigans of the usual suspects.

Freeing up ETF gold is one way to make up for any physical bullion shortfalls in London and Switzerland, when you have done wringing out the gold from states like Venezuela.

Below this is a sneak peek at gold deliveries on the Comex as of yesterday.  The green highlights the 'buyers' and the red indicates 'sellers.'

Below that is a sneak peek at the updated gold chart for tonight.

There are no reliable fundamentals for the short term.   Short term trading is a form of gambling for most people, and the honesty of the tables is not as well regulated. Most short term analysis is at best trying to read the minds of manipulators.

Those backed by big money and powerful connections do what they can get a away with, which is a lot.   If you feel the urge to trade, go to a casino instead.  They have free drinks and entertainment.

NAV Premiums of Certain Precious Metal Trusts and Funds

Silver is still a 'bit cheap' compared to gold, but not as much as it had been with a gold/silver ratio of 68.

Interestingly the Sprott Silver premium still lags Sprott Gold.

FOMC tomorrow.  The metals are in kind of a 'lockdown.'

NAV Premiums of Certain Precious Metal Trusts and Funds

The gold/silver ratio is less lofty at 68.

The Sprott Silver premium is a bit light compared to its historical relationship with Sprott Gold, but both are premium positive.

And both have been slowly adding to bullion by expanding the units outstanding and drawing down some cash levels.

Central Fund is trading at a 4.7% discount to NAV.

NAV Premiums of Certain Precious Metals Trusts and Funds

"Plus ça change, plus c’est la même chose."

Jean-Baptiste Alphonse Karr

NAV Premiums of Certain Precious Metal Trusts and Funds

NAV Premiums of Certain Precious Metal Trusts and Funds - Market Dislocation

Again the premiums to NAV are interesting.   Sprott gold is still positive, with Sprott silver slightly at a discount.

The discount on the Central Fund has continued to narrow.

As you may recall, I 'forecasted' at the beginning of this year that the shortages in physical gold in London would start manifesting this month.

That may have been delayed a bit through the relief to the physical supply being received from the re-repatriation of the Venezuela gold.

Unless something radically changes I do still believe that we will be seeing a 'break' in the physical market at some point in the not too distant future.

We may already be seeing indications of this in some of the pricing, although the official price of gold has become dominated by a currency trade without respect for physical supply and demand.  And as a currency it has been caught up in the trading centered on the questions and concerns raised by Brexit.

And therein lies the roots of the 'break' in the physical and paper markets should it occur.  Because unlike a sovereign currency, no central bank can print additional physical bullion, but only the appearance of it.    And that central bank perception game has grown very old.