Forbes publishes its annual richest of the richest list and Eric Sprott of Sprott Inc. (SII) ex-CEO, the silver promoter guy, the one and only, is on the 17th position within Canada, and classified 1 075 worldwide.
Not too bad! Now, wait and see what will happen when Sprott of the Sprott Asset Management will finally launch his banking project.
I don’t know enough to figure out how Sprott wants to run his Continental Bank. Your bank account is supposed to be backed by hard assets, gold or silver, that is physically held in some Fort Knox by the Continental Bank. You open an account, put your money in, and then you write your checks to get it out. In the meanwhile, Sprott charges you a “service fee” or fees for every transaction. He’s says he’s not going to lend money like the banks. Now is Sprott going to work the buy-sell spread on the commodity to his advantage because after all, I’m exchanging hard cash for hard gold/silver that sits in his vault? Do I have to check every day to see if the value of my account has gone up or down according to the underlying commodity price? Or does Sprott run out and buy more gold or silver with my $ (or leverages it to buy more) & I sit with an account that just shows me a dollar balance on my deposits & some interest payment(?) if it pleases his billionaire tycoon heart? Obviously there’s no government guarantee (insurance) that your $ will be there as you’ve linked it to the physical commodity on hand, that’s in the hands of someone else (in his vault). Will the Continental Bank be governed by the Bank Act? Is it just me, or is this rife for a Ponzi scheme? Cheers!! Anony-sceptic-asorus
ReplyDeleteSprott has been around for I don't know how many years now. I don't think his bank project could turn into a Ponzi scheme, as long he's around. I wouldn't have invested thousands of dollars under Sprott if I wouldn't be confident.
ReplyDeleteThis bank project is quite ingenious. The current banking system is not there to make individual really benefit from their money. On the other hand, his bank project could be promising, but individuals will need to know what they are investing in.
Sunny: I know Sprott has been around for years like you say, but that doesn't mean I trust him. I did a little more digging on the Continental Bank proposal. As per the 2011 Report to Shareholders from Sprott Inc.:” Sprott Inc will make a small investment along side Eric Sprott but Sprott Inc.’s investment will be passive in nature ie the company will have no involvement in management and the company will not be entitled to representation on the board of directors”. Lemme see if I’ve got this right…Mr. Sprott will take shareholders' money from Sprott Inc., sit himself on another board of directors (hey, stock options, SAR’s, maybe some loans too, here we go..kaching, kaching), and not give the shareholders of Sprott Inc. any say in the Bank (or his compensation). I believe that the Continental Exchange is privately held & will remain so. What a small amount of investment is to Mr. Sprott may not be so small to you or I. Lets see: the bank goes belly up, overextends itself, or just plain runs at a loss, Sprott and his billionaire cronies compensate themselves- leverage themselves-- out of publicly owned Sprott Inc. shareholders. Wow!! Cheers!! Anony-allthatglitters-isn’t
ReplyDeleteI don't know too much about Sprott bank project. It been announced a little way back, but I don't know more.
ReplyDeleteHe has the right to invest in his products if he want too. It has to be report and it did, because you know about it. He made those products to make money out of them, obviously. He had invested millions in the PSLV and had made millions more. Its been publicly said and reported. I don't have any problems with that, personally.
Sprott products should be treat like anything else. I personally try to stay diversify with different companies, different sectors, small amount in each... I have my preference, like PPL, but overall, I try to invest not more than 3k even in stuff that I really like.
I had been investing in Sprott products since 2008. What I learned among the way is that the guy is in for the money, and he makes a lot of money!
His products are good for rich people, not for middle class investors like myself. His silver products, PSLV, PHS.U are super volatile. I had invested in PSLV when the units were at 20$+ up... I am still waiting for a recovery. Sprott Canadian Fund is a mutual fund with a high management fee. The result had been there, but I am still under my 7k (the original amount of money invested)...
Not that I am not satisfied, but while investing in something of Sprott, keep in mind the products are more oriented for a rich clientele who can easily deal with the market volatility.
The only Sprott product that I recommend to middle class investors is the SFI.UN, a good dividend yield and the SFI.UN units price usually stay around the 9$ no matter what happen on the market. Stable in value, but its not a grow product. Units stay at the same price, don't move, but the dividend yield is quite good, close to the 7%, stable.
So yeah, Eric Sprott can do whatever he wants you know. He wants to benefit a max from his own stuff, it's his right to do so. It's not a Ponzi scheme. Remember the PSLV episode.