Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Discussion of the Gold portion of the Permanent Portfolio

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vtc
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Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by vtc » Thu Apr 23, 2015 8:59 am

Got an ticker alert that GTU was up 3%.  Wasn't sure if gold was up or the NAV discount was just reverting to the mean.  Check gold graphs not much action. Then check the news and see:
http://finance.yahoo.com/news/sprott-in ... 00525.html
Last edited by vtc on Thu Apr 23, 2015 9:01 am, edited 1 time in total.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Thu Apr 23, 2015 9:11 am

Last edited by dragoncar on Thu Apr 23, 2015 1:35 pm, edited 1 time in total.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by LazyInvestor » Thu Apr 23, 2015 12:58 pm

??? I don't get this
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Thu Apr 23, 2015 1:37 pm

LazyInvestor wrote: ??? I don't get this
Basically, PHYS intends to buy GTU, in which case you'll just end up shares of PHYS.  This is a good deal for PHYS since GTU trades at a discount.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by LazyInvestor » Thu Apr 23, 2015 2:04 pm

Thanks for clarification. I like GTU. It's nice to buy at discount. Hope PHYS behaves similarly.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Pointedstick » Thu Apr 23, 2015 2:16 pm

LazyInvestor wrote: Thanks for clarification. I like GTU. It's nice to buy at discount. Hope PHYS behaves similarly.
It doesn't; it has physical redemption provisions for high rollers.

Seems weird that all of the sudden everyone wants to take over GTU.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by l82start » Thu Apr 23, 2015 2:34 pm

Pointedstick wrote:
LazyInvestor wrote: Thanks for clarification. I like GTU. It's nice to buy at discount. Hope PHYS behaves similarly.
It doesn't; it has physical redemption provisions for high rollers.

Seems weird that all of the sudden everyone wants to take over GTU.
i was thinking the same, it has a sharks circling feel to it.
it would be a shame i like GTU the way it is..
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Pet Hog » Thu Apr 23, 2015 2:48 pm

dragoncar wrote: Basically, PHYS intends to buy GTU, in which case you'll just end up shares of PHYS.  This is a good deal for PHYS since GTU trades at a discount.
Correct me if I am wrong, but it looks like PHYS is going to buy GTU at its NAV, so there should be no discount for PHYS.  They'll be buying all of GTU's physical gold at its market rate.  So not a particularly good deal for PHYS in that regard, but a 7–8% bonus for GTU holders.  I'm having a good day, which can't always be said as a GTU fan!
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by pugchief » Thu Apr 23, 2015 2:53 pm

So, hypothetically, if PHYS buys GTU at NAV, and I have not yet made the QEF election, would it be wise to do so?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Thu Apr 23, 2015 3:15 pm

Pet Hog wrote:
dragoncar wrote: Basically, PHYS intends to buy GTU, in which case you'll just end up shares of PHYS.  This is a good deal for PHYS since GTU trades at a discount.
Correct me if I am wrong, but it looks like PHYS is going to buy GTU at its NAV, so there should be no discount for PHYS.  They'll be buying all of GTU's physical gold at its market rate.  So not a particularly good deal for PHYS in that regard, but a 7–8% bonus for GTU holders.  I'm having a good day, which can't always be said as a GTU fan!
You may be right, since they say "NAV to NAV basis" but I don't really know what that means.  Maybe it means they will offer to exchange PHYS for GTU on a 90% NAV to 100% NAV basis.  They haven't made a legal offer either way so it's talk and speculation at this point.
l82start wrote:
Pointedstick wrote:
Seems weird that all of the sudden everyone wants to take over GTU.
i was thinking the same, it has a sharks circling feel to it.
Part of me thinks this is just a play to kill off the Polar proposal and then Sprott's announcement just never amounts to anything.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Pet Hog » Thu Apr 23, 2015 3:42 pm

dragoncar wrote: You may be right, since they say "NAV to NAV basis" but I don't really know what that means.  Maybe it means they will offer to exchange PHYS for GTU on a 90% NAV to 100% NAV basis.  They haven't made a legal offer either way so it's talk and speculation at this point.
My understanding comes from this line in vtc's Yahoo link:
Based on the relative trading values to NAV of the Sprott Physical Trusts, the proposed exchange offer would unlock US$3.33 per unit for Central GoldTrust unitholders.
The $3.33 number is exactly equal to the NAV discount reported yesterday by GTU: NAV of $43.90 and market closing price of $40.57.  So, in my mind, that means PHYS would have payed $43.90/share if they had done this deal yesterday.  But bearing in mind this line:
GTU units are trading at a -7.6% discount to NAV, while Sprott Physical Gold Trust units are trading at a -0.37% discount to NAV, based on closing prices on April 22, 2015 on the NYSE MKT and NYSE Arca, respectively.
I'm not exactly sure what the NAV-to-NAV basis would imply: a discount of 7.60% or 7.23%?  Hypothetically, if PHYS were also trading at a 7.6% discount, then there would be no bonus for GTU holders.  Therefore, I'll guess that the real discount is 7.23%, so the bonus to GTU holders will be about 7.8% [going from 0.924 ( 1 – 0.076) to 0.9963 (1 – 0.0037)].
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by steve » Fri Apr 24, 2015 6:51 am

These are all good reasons to own and control your own bullion, I like GTU the way it is and hope for no change, I liked it for a portion of gold holding because of convenience, the tax advantages and the way it always worked great for the PP.
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