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Monday, March 28, 2011

Fabulous trading secrets revealed on how to trade efficiently the Sprott Physical Silver Trust UTS (PHS.U)

I wrote about what will follow before, but a reader email make me realize that my finding is huge and I need to refocus more on how to successfully trade Sprott Physical Silver Trust UTS (PHS.U). You’ll find this trading secret no place else on the Web if not right here on the Dividend Girl blog!

Why the Sprott Physical Silver Trust UTS (PHS.U)?

I had been holding Sprott Inc. (SII) in my portfolio since 2008. In the last quarter of 2010, Sprott announced the launch of 2 new investment products: the Sprott Physical Silver Trust UTS and the Sprott Physical Gold Trust UTS. At first, I didn’t pay too much attention at the time on those new Sprott products. Following their initial public offering, Sprott Silver and Sprott Gold got launched in the market. I was already holding gold in my portfolio with the Claymore Gold Bullion ETF (CGL), so I wasn’t much interested in the Sprott Gold. Sprott Gold results were good, but nothing of more interest. But things were completely different for the Sprott Physical Silver Trust UTS (PHS.U). In November 2010, I invest in my first units of Sprott Physical Silver Trust UTS (PHS.U). I wanted to hold this investment but selling was too tempting because money was easily made through the Sprott Physical Silver Trust UTS (PHS.U).

Since November 2010, I sell and buy some Sprott Physical Silver Trust UTS (PHS.U) on a regular basis. Sprott Physical Silver Trust UTS (PHS.U) quickly became one of my favourite. PHS.U started its trading life at 10$ per unit. Just 5 months following its launch, Sprott Physical Silver Trust UTS (PHS.U) almost double in value. PHS.U closed last Friday session at 17.40$!

I never been a heavy trader, but the Sprott Physical Silver Trust UTS (PHS.U) is perfect for quick and easy money gain by overnights buy-and-sell scheme. Perfect yes, but even while trading on the TMX, Sprott Physical Silver Trust UTS (PHS.U) is in US dollars. I know, it’s strange. I never understood why the Sprott Physical Silver Trust UTS (PHS.U) is being trade in US dollars. I stop trying to understand a long time ago. This being said, if you simply don’t understand what I mean, try to place a purchase order for PHS.U without completing the sell. In your broker account, place a purchase order for let say 100 units, ticket symbol: PHS.U, market: Canadian, market trade for the same day. Click continue and stop right there. If you are with TD Waterhouse, you’ll get the following message: “The currency of your account does not match the currency of the market. Your trade will be converted to the currency of your account.” The following mean that you are about to trade in US dollars in the Canadian stock market! The currency problem won’t really affect you at the time of the purchase. But it will at the time of the selling of your Sprott Physical Silver Trust UTS (PHS.U) units. I previously wrote about one specific sell of PHS.U that didn’t go well. My 300$ profit turn into something like a 30$ profit. Why? Well, at the time I place my sell, the US dollars may had worth more than usual. And it had a direct effect on the profit made. You can read more about my trading flop right here.

I recently discover how to avoid such “tragedy” to happen again. The solution proposed by TD Waterhouse being to trade Sprott Physical Silver Trust UTS (PHS.U) inside RRSP or TFSA. The account you trade Sprott Physical Silver Trust UTS (PHS.U) need to be a register one. Here’s the trading secret, step by step: 1. Purchase some PHS.U units inside a RRSP or TFSA broker account. 2. Sell your PHS.U units hold inside the RRSP or TFSA as soon as an appealing profit can be made. 3. As soon the sell order is completed, call your broker and request a wash trade.

What is a wash trade?

A wash trade is something that can be practice, but only inside a RRSP or TFSA broker account. A wash trade will erase the fees related to the currency exchange. Which mean that a 300$ profit will remain at 300$! I didn’t practice a wash trade myself so far as I decided not to sell the Sprott Physical Silver Trust UTS (PHS.U) units I hold inside my TFSA. But I might give it a try soon. The wash trade is interesting for a TFSA. Imagine: the profit made inside a TFSA, even once being withdraw from the TFSA are free of tax and on top on that, all amount withdraw from a TFSA can be deposit following one year after the withdraw is made... When it come to a RRSP, no withdraw can be made of course, if not, you’ll face penalties. Despite being a register account, the TFSA is flexible. If being use properly, the TFSA can be a mine of... silver.

I hope you’ll appreciate this tip but before applying it, please consult your broker. The information shares in this post need to be verified. I am not a professional.


Argonaut said...

I don't think you know what a wash trade is at all. Having Waterhouse wash your trade means that they will put the proceeds from your sale into a $US money market fund. Then you can use those US dollars later to buy another American stock without going through conversion fees.

This does not make PHS.U a great investment, really. You still have to convert to US dollars in the first place. Better way to play silver if you really must is the ETF TSX:HUZ. It tracks the silver price in Canadian dollars with no gimmicks.

Personally I think silver is way overvalued, because everyone is talking about it. I was talking about silver in August, and doubled my money in it and got out. Let someone else find the top.

Sunny said...

Hello - Let someone else find the top? What you mean by that?

You are right, I don't really know about wash trade. It's something new to me.

But what you add to it is even better. It will allow me to keep my US dollars in US dollars. That's pretty good!

Silver of Sprott is still on top! It's been on top since November 2010 and I don't think it will stop ever soon.

I find my little post here quite helpful. The possibility to keep the gains made in US dollars, without having to deal with currency problem... that's huge. Don't you think so? But of course, only inside a RRSP and TFSA.

Frank said...

Sunny strikes again!

Sunny said...

Yeah! :) lol... I was expecting something from you Frank.

Arunan said...

Why are you going in a long route? Simply convert some money into US dollar, and you can trade PHS.U without call TD guys or wash trade; however, think about the canadaian tax... Therefore, you will receive around 55% of your profit after tax. Also, as Argonaut said, silver already ran too much in recent months and it won't stay in high as gold does.

Sunny said...

Hi Arunan,

Well, all this being made in order not to deal with currency conversion. But I guess until a point, the best would simply be to trade the Sprott Silver in US dollars. But I don't hold anything in US dollars as for now. I am trying to avoid. My portfolio still small, I would like to keep it in Canadian dollars.

As for the silver, well I think its still a good investment. Silver seem to go higher than gold. It's being trade more, I think. but always appreciate your view.

Rob said...

You people simply do not understand gold and silver. To explain it to you would probably take a 10,000 word essay and I have no time for that. By a top, argonaut means he thinks it has reached and maybe exceeded its intrinsic value. Silver is nowhere near a top. If you want me to guess a top, here it is for everyone to see. Gold is around 1,400 and the Dow around 12,000. Those two numbers will meet somewhere - I don't know where - and that will be the top for gold and silver. Argonaut also recommended HZU (he spelled it wrong) which I agree with. It is leveraged 2-1 which means it goes up 2X silvers increase but it also falls 2X silvers fall. Silver is very volatile because it is a small market. Corrections can wipe people out if you are not careful. The big bullion banks HSBC and JP Morgan have been illegally manipulating the silver market for years through naked short selling. PHS-U is a good investment because it is backed with physical silver. I find it ironic Sunny that you like SII as an investment but don't like HZU. SII has gone up because of Sprott's big bets on gold and silver. Your logic eludes me. Another estimate - silvers top will probably will probably be in the range of 150 - 200 / oz. It is now 36 / oz. Will their be violent corrections along the way? Of course. But that shakes out the weak players of which you have proven to be one. I am well diversified - I own both gold and silver and that's it. In a few years, I will be laughing all the way to the bank. You can to if you listen.

Sunny said...

Hello Rob, thanks for your comment. If I did not like HZU, its because of its volatility. The PHS.U is much more stable. I am not a weak player, I prefer to stick with what I know.

SII and HZU were 2 different things. The only reason I add SII in my portfolio again is for its special dividend.

As for HZU, I sell when it was possible for me to make a profit. It wasn't easy for me to see HZU fall at 29$ per unit... So when it came back up, I sell, made a little profit and that's all.

pattirose said...

ROB: I'm listening :)

What else do you like asides from HZU? I have CMA and SLW but no gold and would like to pick something up. What looks good to you right now?

Argonaut said...

I did not misspell HUZ, that is a non-leveraged ETF that simply tracks the price in Canadian dollars. Different product. Leveraged ETFs are for short term trading only.

I do understand gold and silver. I am a giant precious metals bug. Silver feels like a short-mid term top to me. I believe 50 ounces of silver are worth an ounce of gold and trade the ratio accordingly.

Rob said...


My apologies on HUZ argonaut. While I don't agree leveraged ETF's are only for short term trade I understand your reasoning. What I wouldn't recommend is leveraging (using borrowed money) to buy a leveraged ETF

Pattirose - SLW is an excellent investment - keep it. It should be the core silver stock in any portfolio. As for gold, you should have the big boys Goldcorp (G) and ABX Barrick. Some junior miners are very volatile but I like OSK Osisko Mining LSG Lakeshore Gold, BTO B2gold Corp. This period early in the year is normally a bad time for precious metals so the fact they are holding up so well bolds very well for bullish tendencies. As long as interest rates are below the real rate of inflation, the bull market to continue. Here is a video I highly recommend everyone watch in its entirety. I 100% agree with it and it will help you understand what is happening. The mainstream media don't tell you this.


pattirose said...

Thanks Rob - appreciate it!!

Sunny: And thank you for all those posts about PHS.U!! Before you'd posted about it I hadn't a clue silver was doing so well. I didn't buy PHS.U but I did buy 3 other silver stocks.

I also had 5-6 TD mutual funds years ago in my RRSP, from when I first started investing and would buy a little of each fund every month with leftover cash. I had huge problems trying to sell them and transfer the funds to another bank. First they told me I had to pay a $125. transfer fee on EACH one, then they said $50. for each one, then they ended up charging me only $50. to transfer all of them. They took days and days to sell them and then more days and days to transfer the $$. The day I went in the bank to do the sale and transfer was also before 4pm and the market was up but they didn't sell them that day - it was a few days later and of course, the market had dropped during each of those days. I was pissed!!

Sunny said...

Thank you all for your contribution!

Pattirose, your welcome! I am a huge fan (if it can be say that way) of PHS.U! I love it! The title is much more stable than HZU. I prefer stable investment and PHS.U is absolutely perfect! With HZU, it was a nightmare. It was difficult for me to follow its volatility. But none of that when it come to PHS.U. I could compare PHS.U to Fortis (FTS) or anything else of an exceptional quality title.

I am very proud of my PHS.U. Sprott is absolutely amazing. Its hard to imagine the guy hitting for retirement, especially now, in those wonderful market condition.

I am so sorry about your trouble for your RRSP with TD. The key is to always stick to what you want. Sometimes, some representative can be very arrogant. That arrived several times to me, but mostly with French representatives.

How it work usually with bank to transfer register account to someplace else, they charge 50$ per account. It's the case at TD and also at RBC. I hold some RRSP investment there that I am looking to take care better and transfer over my RRSP broker account.


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