Interesting question, isn't it? Why is Sprott so concerned about the shareholders of a competing fund?
My concern with redemption is that anyone with enough dough can buy shares en masse, and then pull the physical bullion. To allow that to happen in an environment where a) the market price has the appearance of having been deliberately suppressed, and b) a physical shortage is suspected and purveyors of shorts would love to have a ready supply of cheap physical to lay their hands on, all seems bad management to me.
If the market price were "fair", and pulling physical from a fund was a non-event next to the price setting activity of mining producers and consumers, then I would have no issue with redemption. People should have access to what they own.
But the special allure of the CEF to me all along has been that it *can't* be raided at low prices by deep pockets who in all likelihood were actively working to aid the price lower in the first place.
Do a 5yr chart of FAX vs the dollar (I use UUP as a chartable proxy for the USD).
While it isn't a 1:1 inverse, by and large when the USD gets strong, FAX has price issues. (The rational for this escapes me; FAX doesn't have currency conversion issues with its distribution).
The relationship is pretty true everywhere except the summer of 2013, when FAX took a major multi-month dumping at the same time as a modest drop in the USD. My suspicion is that FAX was then being used as a money market surrogate for big trading money (hedge funds, private equity). And the rumors of a pending crash (not just a decline) in the $USD rose to the point where a lot of money tried to exit FAX at once, and the reputation of FAX among the big money player took a serious hit from which it is still trying to recover.
The $USD weakness did sort of materialize (see the protracted weakish bowl trough starting in summer 2013 and running to a low in the summer of 2015), but there are forces at play that seem to insist the dollar cannot be allowed serious declines at times, and the anticipated crash never happened.
Given the current cliff teetering of the EUR, the main counter-component in USD valuation, we may not see new USD weekness until some serious crises arises that is so bad the safe haven gets black and blue too. The only good news on FAX is that the dividend holds constant, so if you are re-investing at least new shares accumulate at about an 8% annualized rate.