– Silver wars: Eric Sprot to purchase $1.5 billion in physical silver for fund (Examiner, Nov. 23, 2011):
As the price and predictions of silver futures have dropped over the past several days, one leading management firm is creating a new silver fund, and it will require the purchase of over $1.5 billion in physical silver bullion to fill customer requirements.
Let the silver war begin.
On November 23rd, Eric Sprott of
EricSprott Asset Management, filed a prospectus to purchase $1.5 billion dollars worth of physical silver bullion to accomodate a new exchange traded fund, the PSLV.
EricSprott Asset Management CEO Eric Sprott filed a follow up prospectus for the purchase of an additional $1.5 billion of silver bullion to cover expected demand for the company’s exchange traded fund, PSLV.
Combined with the recent decline in the PSLV premium to spot silver to 14 percent from the typical 20 percent, along with Sprott’s reported sale of some of its holdings of PSLV at the rich premium, it appears a familiar hallmark of a gigantic $580 million silver bullion purchase in December of last year emerges once again. Since demand for silver products at Sprott remain brisk, it should come as no surprise to the silver world that Sprott needs more silver. – profitimes.com
The ramifications of a $1.5 billion dollar purchase of physical silver could lead to a massive rise in the price of the metal over the near and middle terms. According to Harvey Organ’s recent inventory report, the total number of silver ounces outstanding with the Comex is 1,485,000. At the current futures price of $31.99, the value of that outstanding silver is $47,505,150.
This value and total amount of silver available at the Comex is only one-thirtieth the total amount of ounces Eric Sprott intends to purchase in the coming months to support his new ETF. Inexplicably, this move is a modern day run on the silver markets, and will accomplish two things: one, it will force the massive short and naked short positions of JP Morgan to have to cover, or offer greater margin protection to for their open positions, and two, it will very likely skyrocket the price in the markets.
The important point here is that this new Sprott ETF will be backed by physical silver, one for one, and is much more solvent than the JP Morgan backed SLV that leverages paper silver upwards of 100:1 of what is sells to the public, and what it holds in reserve.
Eric Sprott has been working and planning this new ETF for a long time, and with silver prices being forced down due to a global liquidity crisis, the time is right for him to strike the physical silver markets with over $1.5 billion dollars in ammunition. The silver wars are about to begin, and the old guard of the markets will unlikely be prepared for the coming battle.