WELCOME TO DYSTOPIA #18
TND Exclusive: Eric Dubin
“Doc” is on vacation. That’s why Silver Doctors is running our recording with GATA’s Bill Murphy, recorded Tuesday. Jason Burack and I have your back, however, with the big news for the precious metals industry: PSLV Secondary! We’ll also dive deep into the “Panama Papers,” and you owe it to yourself to read the stories I have linked at the bottom of this article. Seriously. There’s more going on here than what the mainstream media narrative would have people believe. But let’s get to the great news for precious metals.
The Sprott Physical Silver Trust has announced a secondary offering to buy $75 million worth of silver. (link) To be expected, PSLV shares took a sharp dive on Friday, frustrating some. One commenter on The Wall St For Main St YouTube channel noted, “I will double down but this offering killed my return for the year in the PSLV.” The frustration is understandable. I noted:
It’s a little ironic. It’s kind of like taking a bullet for the team. I’m only being half flippant. If past is prologue, PSLV purchases will suck out of the physical market enough silver, at the margin, to eventually send the entire precious metals space higher. In a roundabout way, this secondary could end up meaning that silver would be in the $20s a heck of a lot sooner, for example, and that would benefit you and everyone. The cartel has executed a managed retreat from the depths of hell circa sub-$14 silver, with their new “no mas” line at $16. This secondary is going to make getting through $16 happen, with momentum. The next line in their sand would come at around $18.50 and that would have been hard to get past without a lot of multiple attempts, and the same sort of b.s. we see right now re. $16. We will probably be looking at $18.50+ a heck of a lot sooner, given this secondary. I don’t own any PSLV, but if I did, the 4%+ decline today would bum me out too. Alas, it is what it is. Dilution in the short-term for intermediate-term gains is the way this should work out. We see similar things happen when a smart mining company makes an outstanding purchase. Usually, regardless of how fantastic a deal might be from a strategic point of view, short-term traders usually punish even the intelligent acquisitions.
I’ve asked Sprott about his thought process and what the firm tries to do with these secondaries. I don’t remember which of the interviews this discussion happened, but we talked about it on two Silver Doctors Weekly Metals & Markets Wrap podcasts. I haven’t been watching the PSLV premium over the last month – just been too busy/distracted with other stuff. But I see that it was about 5% yesterday. Today, despite the 4+ percent haircut, PSLV still has a premium over assets of 0.57%.
I know that Sprott has been thinking above 5% – or thereabouts – as the level necessary to launch a secondary. I don’t have inside information, mind you. I just have talked to him enough that I know how he thinks. Take a look at the historical chart of the fund premium over time (chart #2): http://sprottphysicalbullion.com/sprott-physical-silver-trust/net-asset-value/
The fund finally had enough of a premium to launch a secondary and get this show on the road. It will be a good thing. Short-term pain for intermediate-term gain. — Eric Dubin
Precious Metals Outlook:
Precious metals were already firming up this week. The Jr. mining share index, GDXJ, actually turned in an all time high for 2016 trading. Jason and I discuss this as the “tip of the spear” when it comes to sentiment in the precious metals industry. Dave Kranzler’s latest focuses on GDXJ as well, and it’s a funny read: “If The…Dow Went Up 94% In 2 1/2 Months, Maria Bartiromo And Liz Clayman Would Be Doing Naked Cartwheels.” (link)
Going into next week, the Sprott PSLV announcement will send the sector higher still, confounding expectations for a huge and imminent cartel raid. In addition to the near- and intermediate-term outlook that Jason and I discuss, check out the conversation “Doc” and I had with Bill Murphy – click here. I addressed the epic battle in detail in my last podcast write-up as well: BLS BS Triggers “Insane Demand For Silver” – SD Weekly Metals & Markets.
It wouldn’t be a Welcome To Dystopia without “scumbag nominees.” Maybe we should invite Eric Sprott on sometime to poll him on potential nominations. Jason nominated:
1) TSA for wasting $1.4 million on an IPAD app for airport arrows telling you right or left for which line for pat downs or body scanners (how wasteful!)
2) President Maduro of Venezuela- for his communist/Marxist policies and the hyperinflation and murders and corruption that big government is destroying Venezuela.
- The Panama Papers: The People Deceived – Christopher Black
- Panama Papers? Hybrid War, From Palmyra To Panama – Pepe Escobar
- BBC Bias, Brexit, The EU, Bilderberg And Global Government – Steven MacMillan
Thanks for listening! — Eric Dubin, independent financial/geopolitical analyst.