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

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

Post by Libertarian666 » Fri Jan 08, 2016 10:25 am

pugchief wrote:
Libertarian666 wrote:
pugchief wrote: That statement may be accurate, but has nothing to do with Sprott penalizing the holdouts, which is not possible.
Really? Please explain.
Your premise is that those who are 'conned' into accepting the proxy bid will lose rights they currently have with GTU when the conversion to Sprott takes place, correct? If the GTU unit holders who 'are smart enough to' avoid said con, how exactly will Sprott be able to penalize them? Unless you consider the unwanted conversion a penalty, which I will concede it is, but I think 6Iron was worried they would somehow be penalized in some additional manner. Can you elaborate on what additional penalty would befall those who are forced to convert that would not also be cast upon those who voluntarily give up their proxy?
Well, I'm not a lawyer or a securities expert, but it seems to me that once Sprott has control of GTU, they could force the non-converters out at a fixed price lower than those who sold. Sure, that might be illegal, but then their whole approach is of very dubious legality to me.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by pugchief » Fri Jan 08, 2016 2:09 pm

Libertarian666 wrote:
pugchief wrote:
Libertarian666 wrote: Really? Please explain.
Your premise is that those who are 'conned' into accepting the proxy bid will lose rights they currently have with GTU when the conversion to Sprott takes place, correct? If the GTU unit holders who 'are smart enough to' avoid said con, how exactly will Sprott be able to penalize them? Unless you consider the unwanted conversion a penalty, which I will concede it is, but I think 6Iron was worried they would somehow be penalized in some additional manner. Can you elaborate on what additional penalty would befall those who are forced to convert that would not also be cast upon those who voluntarily give up their proxy?
Well, I'm not a lawyer or a securities expert, but it seems to me that once Sprott has control of GTU, they could force the non-converters out at a fixed price lower than those who sold. Sure, that might be illegal, but then their whole approach is of very dubious legality to me.
I pretty sure they can't do that. If a conversion takes place, it will be at a fixed share ratio and will apply to everyone equally, regardless of whether or not they tendered their proxies. I'm no lawyer either, but I'm pretty sure that's how it works.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Tue Jan 12, 2016 8:27 pm

So is this a done deal?  When is the conversion likely to occur?

Why is SGOL better than PHYS?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by pugchief » Tue Jan 12, 2016 9:12 pm

dragoncar wrote: So is this a done deal?  When is the conversion likely to occur?

Why is SGOL better than PHYS?
Why is SGOL better than IAU, which has a much lower expense ratio [besides being able to trade it free at Schwab]?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Tue Jan 12, 2016 10:06 pm

pugchief wrote:
dragoncar wrote: So is this a done deal?  When is the conversion likely to occur?

Why is SGOL better than PHYS?
Why is SGOL better than IAU, which has a much lower expense ratio [besides being able to trade it free at Schwab]?
I don't know, although there seems to be a bandwagon.  From what I can tell, SGOL is Swiss and maybe holds less paper?  IAU may be less tax efficient.

I mean, what's so bad about PHYS even besides the tax churn of redemptions?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Libertarian666 » Wed Jan 13, 2016 9:44 am

dragoncar wrote:
pugchief wrote:
dragoncar wrote: So is this a done deal?  When is the conversion likely to occur?

Why is SGOL better than PHYS?
Why is SGOL better than IAU, which has a much lower expense ratio [besides being able to trade it free at Schwab]?
I don't know, although there seems to be a bandwagon.  From what I can tell, SGOL is Swiss and maybe holds less paper?  IAU may be less tax efficient.

I mean, what's so bad about PHYS even besides the tax churn of redemptions?
Being taxed at the collectibles rate?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Wed Jan 13, 2016 12:54 pm

Libertarian666 wrote:
dragoncar wrote:
pugchief wrote: Why is SGOL better than IAU, which has a much lower expense ratio [besides being able to trade it free at Schwab]?
I don't know, although there seems to be a bandwagon.  From what I can tell, SGOL is Swiss and maybe holds less paper?  IAU may be less tax efficient.

I mean, what's so bad about PHYS even besides the tax churn of redemptions?
Being taxed at the collectibles rate?
Which options do we have that are not taxed at the collectibles rate?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Libertarian666 » Wed Jan 13, 2016 3:53 pm

dragoncar wrote:
Libertarian666 wrote:
dragoncar wrote: I don't know, although there seems to be a bandwagon.  From what I can tell, SGOL is Swiss and maybe holds less paper?  IAU may be less tax efficient.

I mean, what's so bad about PHYS even besides the tax churn of redemptions?
Being taxed at the collectibles rate?
Which options do we have that are not taxed at the collectibles rate?
GTU :-(

And CEF, but that has a lot of silver too.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by AdamA » Thu Jan 14, 2016 7:22 am

Libertarian666 wrote: And CEF, but that has a lot of silver too.
Actually not a bad idea, though, especially if you don't hold a high percentage of your overall gold allocation in an ETF or close-ended fund. 

I just like these Canadian funds better.  They are more transparent and less susceptible to Wall Street shenanigans, IMO. 
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Libertarian666 » Thu Jan 14, 2016 10:30 am

AdamA wrote:
Libertarian666 wrote: And CEF, but that has a lot of silver too.
Actually not a bad idea, though, especially if you don't hold a high percentage of your overall gold allocation in an ETF or close-ended fund. 

I just like these Canadian funds better.  They are more transparent and less susceptible to Wall Street shenanigans, IMO.
Yes, I have some CEF, but then I'm a well-known heretic with respect to the PP.  ;D
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Libertarian666 » Sun Jan 17, 2016 10:12 am

So does anyone know what happens to people who hold GTU in a brokerage account? Even though I see that Sprott has taken it over and has exchanged units of Sprott Physical Gold Trust for GTU, my Fidelity account still shows GTU.

I guess I need to call Kingsdale Shareholder Services to find out what is going to happen.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by LazyInvestor » Sun Jan 17, 2016 10:31 am

I found this

As a result of the completion of the Merger Transaction: (i) GoldTrust unitholders received an aggregate of 4.4108 units of Sprott Physical Gold Trust in exchange for each unit of GoldTrust;

https://finance.yahoo.com/news/central- ... 00760.html

What does this come to? Are we being ripped off somehow?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by LazyInvestor » Sun Jan 17, 2016 10:38 am

with google finance end of day values GTU 39.42 / PHYS 8.94 = 4.4094

4.4108 * 8.94 PHYS = 39.4325 GTU

and

Net asset value per Unit $39.76

from http://gold-trust.com/asset_value.htm

so it seems they are converting to PHYS at a discount, which means we are kinda at a loss?!
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Reub » Sun Jan 17, 2016 11:04 am

I'm sticking with PHYS because at my age it helps after I've eaten too much.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by LazyInvestor » Sun Jan 17, 2016 11:09 am

This is how they calculated exchange ratio:

NAV to NAV Exchange Ratio

In connection with the Sprott offer for GTU, the NAV to NAV Exchange Ratio (as defined in the Sprott offer) is 4.3997 PHYS units per GTU unit. In addition, if the Sprott offer is completed each GTU unitholder will receive the Bonus Consideration (as defined in the Sprott offer) of an additional 0.0111 PHYS units per GTU unit. In total, if the Sprott offer is completed, GTU unitholders will receive a total of 4.4108 PHYS units per GTU unit.

For the purposes of the NAV to NAV Exchange Ratio, the number of PHYS units to be distributed to each GTU unitholder was determined based on: (A) the net asset value per GTU unit (as calculated, in accordance with GTU’s amended and restated declaration of trust, on the second business day prior to the expiry date of the Sprott offer (the “Expiry Date”); divided by (B) the net asset value per PHYS unit (as calculated, in accordance with PHYS’ trust agreement, on the second business day prior to the Expiry Date), including, in the case of GTU’s and PHYS’ gold bullion, the value thereof based on the London Bullion Market Association second fixing price for gold bullion on the second business day prior to the Expiry Date.

For the purposes of the Bonus Consideration, the number of PHYS units to be distributed to each GTU unitholder was determined based on: (A) U.S.$0.10; divided by (B) the net asset value per PHYS unit (as calculated, in accordance with PHYS’ trust agreement, on the second business day prior to the Expiry Date), including, in the case of GTU’s and PHYS’ gold bullion, the value thereof based on the London Bullion Market Association second fixing price for gold bullion on the second business day prior to the Expiry Date.

Source: https://globenewswire.com/news-release/ ... Trust.html
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by rickb » Sun Jan 17, 2016 11:38 am

As of the close on Friday the NAV of PHYS was $9.00 and the NAV of GTU was $39.76, which is a ratio of 4.41777.

Apparently Sprott's calculation ended up with a ratio of 4.3997.

Since the $.10 bonus shares work out to .0111 they're apparently using $9.00 per share as the NAV of PHYS, which matches what they've posted at http://sprottphysicalbullion.com/sprott ... set-value/

Working backwards, they must be using a NAV for GTU of $39.5973, which is $.16 per share short of what GTU posted Friday at http://www.gold-trust.com/asset_value.htm

By my calculations, instead of a bonus of $.10 per share the actual net effect is a penalty of $.06 per share.  Times nearly 20M shares adds up to a little more than $1M.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Libertarian666 » Sun Jan 17, 2016 1:24 pm

rickb wrote: As of the close on Friday the NAV of PHYS was $9.00 and the NAV of GTU was $39.76, which is a ratio of 4.41777.

Apparently Sprott's calculation ended up with a ratio of 4.3997.

Since the $.10 bonus shares work out to .0111 they're apparently using $9.00 per share as the NAV of PHYS, which matches what they've posted at http://sprottphysicalbullion.com/sprott ... set-value/

Working backwards, they must be using a NAV for GTU of $39.5973, which is $.16 per share short of what GTU posted Friday at http://www.gold-trust.com/asset_value.htm

By my calculations, instead of a bonus of $.10 per share the actual net effect is a penalty of $.06 per share.  Times nearly 20M shares adds up to a little more than $1M.
So the big "bonus" is just as phony as the rest of their offering terms.

What a bunch of scumbags.

Needless to say, I'm going to sell my PHYS as soon as I get it, or sell the GTU if I can still do that at Fidelity.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dualstow » Sun Jan 17, 2016 5:11 pm

Reub wrote: I'm sticking with PHYS because at my age it helps after I've eaten too much.
PLOP & PHYS?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by LazyInvestor » Mon Jan 18, 2016 8:13 am

It seems we won't have time to trade as the day of conversion is Jan 19. Today is some holiday so markets are closed.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Libertarian666 » Tue Jan 19, 2016 10:29 am

I was able to sell my converted shares but I had to call Fidelity to do it.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Tue Jan 19, 2016 12:03 pm

I'm waiting until my annual contribution/rebalancing time next month.  Is there an urgent need to get out of phys?  Seems my taxes next April are screwed either way!
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Libertarian666 » Tue Jan 19, 2016 12:14 pm

dragoncar wrote: I'm waiting until my annual contribution/rebalancing time next month.  Is there an urgent need to get out of phys?  Seems my taxes next April are screwed either way!
The need is that I hate Sprott's behavior in this situation and don't want to do business with them in any way, ever.
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by al14 » Tue Jan 19, 2016 12:42 pm

Hello!
I was a GTU holder until PHYS took over a few days ago. Given that I always elect QEF option on my US tax form I do not find PHYS any different from GTU since the annual PFIC statements show no distributions since the inception in 2010. I'm a little confused by this, since the redemptions should cause adverse 28% collectible tax rate on US unit holders in Sprott PHYS, but there is no evidence as far as annual PFIC statements show. Is there another tax document that exposes US unit holders to 28% collectible tax rate, or is there something I don't understand?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by Reub » Tue Jan 19, 2016 3:09 pm

I guess that this is my first day owning PHYS and I noticed that it closed down 0.34% vs. down 0.10% for GLD and IAU. Why is this?
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Re: Sprott Intends to Make Exchange Offers for Central GoldTrust and Silver Bullion

Post by dragoncar » Tue Jan 19, 2016 3:23 pm

al14 wrote: Hello!
I was a GTU holder until PHYS took over a few days ago. Given that I always elect QEF option on my US tax form I do not find PHYS any different from GTU since the annual PFIC statements show no distributions since the inception in 2010. I'm a little confused by this, since the redemptions should cause adverse 28% collectible tax rate on US unit holders in Sprott PHYS, but there is no evidence as far as annual PFIC statements show. Is there another tax document that exposes US unit holders to 28% collectible tax rate, or is there something I don't understand?
Good question, and I'd like to know also.  I tried to find out what makes a gold holding collectible and it seems like closed-end funds are not whereas ETFs are?  I did search in the gold sub-forums but I couldn't find a recent summary of non-physical gold options.
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