Sprott Physical Silver Trust Falls After Follow-On Offering
July 12th 2012 at 9:15am by John Spence
Sprott Physical Silver Trust (NYSEArca: PSLV) was in negative territory Thursday while silver prices rose after its manager announced a follow-on offering to buy more bullion.
Sprott Physical Silver Trust was down 4% in afternoon trading Thursday.
The iShares Silver Trust (NYSEArca: SLV), an $8.5 billion ETF that invests in silver bullion, gained 0.7% in recent action.
Sprott Physical Silver Trust fell while silver prices rose because its premium to net asset value narrowed after the follow-on announcement late Wednesday.
Although it trades on NYSE Arca like most ETFs, the Sprott silver product has some unique wrinkles.
First, it’s structured as a closed-end fund, so it can see premiums and discounts to indicative value based on demand for the shares.
PSLV traded at a premium of 7.2% on Wednesday, according to Morningstar. However, that premium narrowed Thursday as the follow-on offering will increase the number of shares outstanding.
The silver trust is managed by Toronto-based Sprott Asset Management.
The silver fund is unique because large shareholders are able to redeem shares on a monthly basis in exchange for silver bullion.
PSLV is also listed on the Toronto Stock Exchange.
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