Fun With Canadian Retail Precious Metals Merger Arbitrage

This morning Sprott launched an exchange offer for shares of GTU and TO:SBT-U (no positions).  Sprott has also set up a website,, in an effort to help convince shareholders of GTU and SBT-U that these exchanges are in their best interests.


What’s interesting about this situation is that it seems (based on comments I have seen on my own blog post on the subject and on other discussion venues) like the GTU shareholders don’t want interference from outside parties to help them close the pesky NAV discount that arises from the inferior construction of their trust.  They like their old school inferior Trust exactly how it is, and they’re sure that the NAV discount will rebound eventually.  (I addressed this belief in my earlier post)   My impression of GTU shareholders is that they are some of the most naive retail investors on the planet, and this makes for an interesting dynamic for guys like me who might be inclined to trade this merger arbitrage spread (buying GTU, shorting PHYS).

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