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.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
