Why is Eric Sprott Selling PSLV Shares Fast and Furiously?

Regular readers of this blog are no strangers to the slick trading Eric Sprott exhibited in his own Physical Silver Trust ($PSLV: no positions).  Sprott took advantage of suckers “investors” bidding up the premium to Net Asset Value of his trust on the heels of gross misinformation and hype, selling the shares to these “investors” at a huge premium (and presumably reinvesting the proceeds into silver instruments at spot*).

But something strange happened in the last few weeks.   See, The Sprott Foundation has been selling PSLV shares at a rapid clip (data from SEDI.CA).



This is strange, because PSLV is no longer trading at a big premium to Net Asset Value.  In fact, recently, the premium has been below 2%, and has even approached zero percent.

Why, then, is Eric Sprott, On behalf of the Sprott Foundation,  selling PSLV shares so rapidly?  The Foundation has sold 3,089,445 shares (out of their total 4,642,070 shares held at the start of the period) since March, 21, 2013, and has been actively selling PSLV shares in the market every single day during since 3/21/13.

I’ll leave that question to my readers.


EDIT (4/11/13 9am): 

1) Sprott Foundation sold another 700,000 PSLV on 4/8/13 and 4/9/13

2) others have started to take notice of this.  from the comments section below:

Ed Steer’s Gold & Silver Daily:-

“Over the last couple of days I’ve had quite a number of readers ask me what was up with Eric Sprott selling a boat load of PSLV. When I first heard about this on Monday, I picked up the phone and asked him about it. He told me that a lot of the shares he sold were inside his charitable foundation…and he had to sell a bunch to meet some obligations there…and the rest of the units he sold were to buy shares in silver mining companies. He feels that they will outperform the metal itself on the next rally…and I agree.”

KD here:  First of all, it’s not that “a lot” of the shares were sold inside the charitable foundation – they all were sold by the charitable foundation.  Anyway, Eric Sprott (via Ed Steer)  is claiming that “a bunch” of the PSLV units were sold to “meet obligations” from the charitable foundation…  You can interpret that however you want, but we’re talking about more than $ 35MM notional of PSLV that was sold… Those are some big obligations the charity had to meet, eh?  I cannot find any public records of the Foundation’s giving pledges – their last update on the website is their 2010 statement, where they made a total of $5.7MM in donations, which was down from $6.8MM in the 2009 fiscal year.

I did find this, which is dated 3/22/13 – right around the time the PSLV sales started to pick up in pace – but it only accounts for $ 5MM in notional.

There is the possibility that there is was still a big outstanding obligation related to this $ 25MM pledge from last year.

In any case, I applaud the Sprott Foundation’s charitable efforts, and would love to see more transparency from them in terms of the details of their giving.


*note: I’m not talking about PSLV secondary offerings – I’m talking about the open market trades Sprott executed in PSLV.  If you don’t get it, read my archives.  It’s all very well documented.

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