silver to surge, as Sprott buys $1.5 billion in phys silver

[Large Sarge]

http://www.commodityonline.com/news/Silver-to-surge-as-Sprott-files-to-buy-$15-billion-of-silver-bullion-43932-3-1.html

ONTARIO(Commodity Online): Canadian billionaire Eric Sprott has filed for the purchase of $1.5billion in Silver bullion for covering an expected demand in his Sprott Asset Management's silver ETF- PSLV. A $1.5 billion in purchase will require about 45 million oz of silver.


Such a large purchase has normally Lead to higher prices. Sprott's $580 million silver purchase in 2010 was accompanied by an almost 175% gain in COMEX prices when prices surged from $18 to $49! The current purchase of $1.5 billion is almost 3 times the 2010 purchase and as such prices could easily double or even triple.


Barclay's iShares Silver Trust issue also witnessed rapid price acceleration. COMEX silver had doubled from $7.50 to $15 within 6 months to the launch of the ETF.




http://silverdoctors.blogspot.com/2011/11/sprott-asset-management-files.html

Sprott Asset Management Files Prospectus With SEC for $1.5 BILLION PSLV Follow-On
The Doc has discovered that on Wednesday November 16th, Sprott Asset Management filed a prospectus with the SEC detailing intentions to offer an additional $1.5 BILLION UNITS of the PSLV trust.
Notice that the cartel initiated a new massive silver raid THAT VERY EVENING, so far taking silver nearly 15% lower from $35 to near $30! This obviously seems counter-intuitive as a 15% discount on silver means that Sprott will be able to obtain 15% more phyzz with the proceeds of his follow-on.
We believe that the cartel is gambling with this move BIG TIME, and GOING ALL-IN with their play to induce massive panic/fear in the hopes of scaring potential investors away from PSLV/ silver.

As to the potential implications of what a $1.5 billion unit PSLV follow-on would mean to the physical silver market, Sprott's last issue in 2010 was for $580 million, and silver ran from $18 to $49 over the next 6 months while it took Sprott over 2 months reportedly to source all of the silver.
$1.5 billion would be approximately 40-50 million ounces of silver- meaning we are talking an amount of physical silver equal or possibly exceeding the ENTIRE 2011 US MINT SILVER EAGLE PRODUCTION!
Also meaning we are talking an amount of physical silver that is 10-20 million ounces greater than the entire COMEX registered silver inventory!!

Word is that this could be approved in UNDER 2 WEEKS, and that Sprott already has the silver orders in place. As in, SEC approval, BANG! 50 MILLION OUNCE PHYZZ ORDER PLACED.

[osoab]

Sprott is not outright buying that much silver at once. He is using shelf warrants to notify that he intends to buy the silver.


Sprott Physical Silver Trust Will Not Go Out and Buy $1.5B in Silver Imminently (http://kiddynamitesworld.com/sprott-physical-silver-trust-will-not-go-out-and-buy-1-5b-in-silver-imminently)





I just want to clear something up. When I wrote last week (http://kiddynamitesworld.com/sprott-physical-silver-trust-files-shelf) about how the Sprott Physical Silver Trust ($PSLV (http://stocktwits.com/symbol/PSLV)) had filed a shelf offering for up to $1.5B in new shares, I thought that readers understood the difference between a “shelf” and a “secondary.” If you don’t understand, you can think of it like this: the shelf is like a pre-approval that allows the Trust to issue secondary offerings without filing a prospectus and waiting for approval from regulators each time. They “pre” file a prospectus (Aka: the shelf) for the entire amount – $1.5B in this case – and can then offer shares as they desire to meet demand. It doesn’t mean that PSLV is going to do an offering of $1.5B all at once. If Eric Sprott wanted to, he could indeed go out and buy $1.5 B of silver for the Trust, issuing $1.5B in new PSLV shares. In reality, he’ll be more likely to do smaller offerings – I would guess something in the range of perhaps $250 MM* – and then maybe another slug a few months after that if the premium to NAV doesn’t get whacked too hard.
The reason I mention this is because the Silver Blog Mafia seems to have (finally) gotten wind of the Sprott announcement, misinterpreted it as usual, and is miseducating the masses with it – excitedly drooling over the prospect of PSLV rushing out and buying $1.5B in silver. I noticed an influx of Yahoo Finance Message Board incoming clicks last night and this morning – to my PSLV Files Shelf (http://kiddynamitesworld.com/sprott-physical-silver-trust-files-shelf) post - as a result of precisely this sort of confusion.

Will it be bullish for silver if PSLV does any secondary offering (which results in the purchase of silver bullion)? Of course. I told you that four months ago (http://kiddynamitesworld.com/ask-eric-sprott-why-wont-he-buy-more-silver-for-pslv)- I wrote a whole post about it. It will also be bearish for PSLV’s premium to NAV: more shares require more “investors” who believe the hype and fear and want to pay a huge premium. Might PSLV buy $1.5B in silver over a multi-year time frame? Absolutely. But if you’re expecting a $1.5B lump offering and the subsequent crashing of the COMEX, you’re going to be sorely disappointed.

For an example of past secondary offerings filed under a shelf (http://kiddynamitesworld.com/cef-announces-secondary-offering-etf-lesson-part-v), see $CEF (http://stocktwits.com/symbol/CEF). They filed (http://www.centralfund.com/Press%20Releases.htm) a $750 MM shelf in March, 2008, and proceeded to do a number of small secondaries under that shelf over an 18 month period. Then they filed a $1 B shelf in September of 2009 and did the same thing – a number of small offerings.
-KD

disclosure: I have NO POSITIONS in $PSLV (http://stocktwits.com/symbol/PSLV), $SLV (http://stocktwits.com/symbol/SLV) or $CEF (http://stocktwits.com/symbol/CEF) at this time.
* Master marketer (http://screwtapefiles.blogspot.com/2011/08/erics-delivery.html) that he is, Sprott might be more likely to do a smaller offering, while simultaneously trumpeting that he is having trouble buying enough physical silver.

ps – long time readers will remember when Barrons inexcusably made a similar mistake (http://kiddynamitesworld.com/today-in-silver-misinformation) when they misunderstood an SLV filing to increase the maximum number of shares outstanding allowed.

While Barrons’ interpretation was blatantly, factually incorrect, it should be pointed out that the “OMG, Sprott is going to buy $1.5 B in silver soon!” interpretation is not yet factually incorrect – it is legally possible for that to happen. However, those who know what they are talking about understand that this is not what the PSLV shelf filing implies. You don’t have to believe me if you don’t want to - just remember this post when PSLV’s secondary offering comes in much smaller than $1.5B. I know that what you WANT to be told is that Sprott is buying $1.5B in silver bullion – but remember Confirmation Bias (http://kiddynamitesworld.com/?s=confirmation+bias) – wanting something to happen doesn’t mean it will happen.




I Don’t Know Why I Waste My Time Trying To Correct Silver Misinformation (http://kiddynamitesworld.com/i-dont-know-why-i-waste-my-time-trying-to-correct-silver-misinformation)


“Waste of time” is literally the only way to put it… Even if you force feed it to them in their own platform, they still don’t get it. (top posts in the graphic are the most recent)…

[Bigjon]

Yep, I think that we could see 20 FRN silver by summer.

I have some March calls and I'm praying for one more rally to unload into.

If Germany doesn't cave to "printing money" we will see deflation.

[Large Sarge]

If Germany doesn't cave to "printing money" we will see deflation.

if germany does not print, then we get systemic collapse (including the U.S.)

remember lindsey williams prediction, all paper assets will be essentially worthless by the end of 2012, and silver and gold will be at record highs.

the elite own gold and silver, and while their nominal purchasing value stays the same, regardless of paper price, the only way to steal all the paper wealth is through inflation, not deflation.

in deflation your paper dollar gains in purchasing value.

I trust lindsey, he saidf the elite have been loading the boat with silver and gold for years, deflation does them little or no good...

the guy holding bonds and cash is king in deflation, not the guy owning metals.

[Twisted Titan]

If Sprott keep buying the way he is.......he will eventually get " The Call".

The same one Buffet got back in 07...

The best stratgey is to buy like mad but keep the lowest of profiles cause when the music finally stop the minions of the State will be on a bloodhunt to pin their massive fraud and theivery on somebody.


Sprott is gonna fit that bill nicely.




You heard it on GSUS first.

[Bigjon]

if germany does not print, then we get systemic collapse (including the U.S.)

remember lindsey williams prediction, all paper assets will be essentially worthless by the end of 2012, and silver and gold will be at record highs.

the elite own gold and silver, and while their nominal purchasing value stays the same, regardless of paper price, the only way to steal all the paper wealth is through inflation, not deflation.

in deflation your paper dollar gains in purchasing value.

I trust lindsey, he saidf the elite have been loading the boat with silver and gold for years, deflation does them little or no good...

the guy holding bonds and cash is king in deflation, not the guy owning metals.


Well, actually we have already had the "collapse", it's just that TPTB were not ready for it.
When they are ready for it we will have the collapse.

Deflation also shakes out the ones who are uncommitted, as silver heads for 4 FRN's will you jump off the silver boat?

How long will the "game" last, I say until "they" blow the whistle.

Did the tree fall in the forest, if no one printed it in the paper?

[Large Sarge]

some of it is which side of the trade are you on also,

if say less than 5% of americans own gold ( and a lesser amount own silver).

then that means 95% are non-owners

now 100% of american's own cash

a huge percentage have bank accounts

etc

so if you are a master criminal, do you want to rob the 95% that do not own precious metals (through inflation), or do you steal from the 5% that do own the metals, nominally, in a deflation environment?

my guess is that the criminals go for the big kill, and hit the 95% that own no metals

[kiffertom]

if germany does not print, then we get systemic collapse (including the U.S.)

remember lindsey williams prediction, all paper assets will be essentially worthless by the end of 2012, and silver and gold will be at record highs.

the elite own gold and silver, and while their nominal purchasing value stays the same, regardless of paper price, the only way to steal all the paper wealth is through inflation, not deflation.

in deflation your paper dollar gains in purchasing value.

I trust lindsey, he saidf the elite have been loading the boat with silver and gold for years, deflation does them little or no good...

the guy holding bonds and cash is king in deflation, not the guy owning metals.hey sarge heres john exters deflationary pyramid. http://www.silverbearcafe.com/private/05.09/upsidedown.html

[Neuro]

When faced with deflationary collapse immediatelly or hyperinflationary collapse later, you can bet the leaders have no problem letting the computers generate more digits...

[Kali]

This will have a negative effect on silver spot, that's why they mention it.

Already heading downwards.