02 December 2014

Continuing Sprott PHYS Redemptions

At the start of each month any redemption request lodged on the 15th of the prior month shows up on the website of Sprott's precious metals fund. On December 1st we had 36,915oz redeemed, which would have been related to trading between 16 Oct and 15 Nov. I've posted on this activity here and here.
The table below shows the redemptions by month since they first started and the average daily arbitrage profit/loss a trader could make by buying PHYS, redeeming it, and selling the physical at spot.
Date of Redemption PHYS Gold PHYS Redemption (oz) Average Daily Arbitrage Profit/Loss
Jul 2nd 2013 400  0.139%
Aug 1st 2013 8,354  0.214%
Sep 3rd 2013 12,500  0.045%
Oct 1st 2013   -0.234%
Nov 1st 2013 17,260 0.122%
Dec 2nd 2013 19,200 0.144%
Jan 1st 2014 83,890 0.327%
Feb 2nd 2014 91,680 0.125%
Mar 3rd 2014
Apr 1st 2nd 2014
May 1st 2014
Jun 2nd 2014
Jul 1st 2014 6,150 0.006%
Aug 1st 2014 12,028 -0.022%
Sep 1st 2014
Oct 1st 2014
Nov 3rd 2014 27,911 0.086%
Dec 1st 2014 36,915 0.077%
Total 316,288
You'll note that any month the arbitrage is negative (a loss), there is no redemption, and when it is positive, there is a redemption. The only month that doesn't fit this pattern is August 2014, however, while on average August showed an arbitrage loss, there were 8 days when it was profitable.
It is clear now that this is arbitrage driven activity which takes advantage of any discount to NAV on the Sprott funds. Since PHYS first moved out of a premium to NAV in July 2013 it has lost 19.6% of its gold. As long as there is little retail interest in PHYS to bid up its share price above NAV, PHYS is going to continue to lose metal.


  1. Nah, Bron - those prices are just PAINTED! It's all manipulated, all the time

    Ponzi Ponzi Ponzi

    when Silver shot up yesterday, though, that was FOR REAL - what we like to call "price emancipation"

    Not-Ponzi Not-Ponzi Not-Ponzi

    please try to keep up!

  2. More complicated than simply a "lack of interest in PHYS" I'm sure. The arbitrage going on here will itself be arbitraged: the metal being sold out of PHYS is disappearing, either directly or an intervening step or two later, into stronger and stronger hands.

    It will *not" be coming back into the market, at least not at today's ludicrous, paper prices for the simple reason that no one is going to BUY physical metal as a speculative vehicle...leastwise not without a condition of contango.

    That'd be the ones buying those unbacked futures contracts...

  3. "stronger hands!

    yes, that's right, Goddammit!!!

    there are NO retail jewellers or bullion stores in Shanghai, Mumbai or Dubai - they simply WON'T sell it to you. Well, not if you are Western, at least.

    that's it. It's gone! Vamoosh! "CHINA" is synonymous with "THE CHINESE" and they are all cloned automata, doing only what the Communist (key word) Government tells them to do i.e. Buy Gold, Never Sell It

    if you stroll the mean streets of Shenzhen, Kowloon, Bangkok, Singapore, Manila, Dubai or Delhi all those Pawn Shops are just "paper" facades - nobody is actually reselling their precious metals, and you couldn't buy any even if you wanted to. That's the LAW - Asians only every BUY and are forbidden by the Police, the Communist Party, Culture, Religion, EVERYTHING from EVER selling

    In the alternative, this is all total bollocks and the notion of "strong hands" is a complete myth, with reflex sales occurring at both ends of the price range (very low and very high) and every purchaser inevitably having a corresponding seller

    But hey, KEEP STACKIN', RIGHT!