Gold exchange-traded fund
Encyclopedia
Gold exchange-traded products are exchange-traded fund
s (ETFs), closed-end fund
s (CEFs) and exchange-traded notes (ETNs) that aim to track the price of gold
. Gold exchange-traded product
s are traded on the major stock exchange
s including Zurich, Mumbai
, London
, Paris
and New York
. , physically backed funds held 2,062.6 tonnes of gold in total for private and institutional investors. Each gold ETF, ETN, and CEF has a different structure outlined in its prospectus
. Some such instruments do not necessarily hold physical gold. For example, gold ETNs generally track the price of gold using derivatives
.
since 1966 and the AMEX
since 1986.
The idea of a gold exchange-traded fund was first conceptualized by Benchmark Asset Management Company Private Ltd
in India
when they filed a proposal with the SEBI
in May 2002. However it did not receive regulatory approval at first and was only launched later in March 2007. The first gold ETF actually launched was Gold Bullion Securities, which listed 28 March 2003 on the Australian Stock Exchange
. Graham Tuckwell, the founder and major shareholder of ETF Securities
, was behind the launch of this fund and enlisted N.M. Rothschild & Sons (Australia) Ltd, Citibank and Deutsche Bank as market makers on the ASX.
s and bar
s.
In the United States, sales of a gold ETF are treated as sales of the underlying commodity and thus are taxed at the 28% capital gains
rate for collectibles, rather than the rates applied to equity securities
.
, Alberta
, Canada
, mandated to keep the bulk of their net assets in precious metals, with a small percentage of cash. The Central Fund of Canada holds primarily a mix of gold and silver
, while the Central Gold Trust holds primarily gold.
The custodian of the precious metals assets of both funds is the main Calgary branch of CIBC
. Both funds are considered especially safe because of their published codes of governance
and ethics
, the Central Fund's history of operation since 1961, and the funds' simple prospectus
es which equate shares of the closed-end funds with real units of ownership in the trusts. As of October 2009, the Central Fund of Canada held 42.6 tonnes of gold and 2129.7 tonnes of silver in storage, and the Central Gold Trust held 13.6 tons of gold in storage.
, and as of June 2009 held 1,315.95 tonne
s of gold in storage. Exchange Traded Gold securities are listed on multiple exchanges worldwide by various ETF providers, including:
marketed by State Street Global Markets LLC, an affiliate of State Street Global Advisors
, accounts for over 80 percent of the gold within the Exchange Traded Gold group. As of 2009, SPDR Gold Shares is the largest and most liquid
gold ETF on the market, and the second-largest exchange-traded fund
(ETF) in the world.
Stock market listings:
The SPDR Gold Trust ETF (GLD) holds a proportion of its gold in allocated form in London at HSBC
, where it is audited twice a year by the company Inspectorate. GLD has been criticized by Catherine Austin Fitts and Carolyn Betts for its extremely complex structure and prospectus
, possible conflict of interest
in its relationships with HSBC and JPMorgan Chase which are believed to have large short position
s in gold, and overall lack of transparency. GLD has been compared with mortgage-backed securities and collateralized debt obligations. These problems with SPDR Gold Trust are not necessarily unique to the fund, however as the dominant gold ETF the fund has received the most extensive analysis.
"Gold Bullion Securities" (previously marketed by Lyxor Asset Management) listings:
Similar to Gold Bullion Securities, ETF Securities’ ETFS Physical Gold and ETFS Physical Swiss Gold are also backed by allocated gold bullion. They later launched ETFS Physical Swiss Gold Shares and ETFS Physical Asian Gold Shares on the New York Stock Exchange for US investors seeking geographical and custodian diversification.
ETF Securities’ physical gold ETCs — ETFS Physical Gold (PHAU), ETFS Physical Swiss Gold (SGBS) and Gold Bullion Securities (GBS) — are all backed by “allocated” gold bars – uniquely identifiable bars which carry no bank credit risk. The precious metal bars are held in trust in London by the Custodian HSBC Bank USA N.A., the world’s leading Custodian for ETCs. The metal held with the Custodian must conform to the rules for Good Delivery of the London Bullion Market Association (LBMA). Securities are only issued once metal is confirmed as being deposited into the Company’s bullion account with the Custodian. Consistent with allocated gold, no precious metal is borrowed, loaned out nor does it earn any income.
.
on 21 January 2005 and is listed on the New York Stock Exchange and Toronto Stock Exchange . As of July 29, 2010, the fund claimed to hold 90.88 tonne
s of gold in storage. According the prospectus, trading in the fund may be suspended if COMEX gold trading is restricted or gold delivery is not possible. Some writers have expressed doubts that iShares has sufficient gold inventory to back its existing warehouse receipts. One of the main differences between iShares and SPDR Gold Trusts is that iShares creates roughly 100 shares from every ounce of gold, versus the 10 shares per ounce created by SPDR. This makes iShares more accessible for day traders or small investors to play the gold market.
, EUR
, USD
and GBP
.
. PHYS publishes its inventory of Good Delivery gold bars on the web, and (uniquely among gold ETFs) allows shares to be redeemed for whole bars. As LBMA bars weigh between 350 and 430 troy ounces, physical redemption is limited to such increments. Regardless, the provision for physical redemption lends credibility to the fund's claim of holding unencumbered physical gold, especially as of 2010 when funds such as SPDR Gold Shares with elaborately structured holdings are under scrutiny. As of June 2010, the Sprott Physical Gold Trust held 582,417 ounces of gold, plus about $9 million of other assets.
, EUR
, USD
and GBP
.
SGLD trades in US dollars and has raised over US$1.1 billion in assets to date.
Each Gold P-ETC is a certificate which is secured by gold bullion held in J.P. Morgan Chase Bank’s London vaults. The vast majority of gold bullion is held in allocated gold bars. Any residual value that cannot be split into standard gold bars will be put into unallocated gold. This is placed in a segregated account with J.P. Morgan Chase Bank acting as Custodian and Deutsche Bank as Trustee. The investment return is achieved by holding gold bullion which is valued daily at the London PM fixing price.
One of the main advantages of this product is the annual management fee, which at 0.29% is considerably lower than comparable competing products. SGLD has achieved UK reporting status, which provides for preferential tax treatment in the United Kingdom.
in July 2010.
launched the Gold-Price-Linked ETF (code "1328") on the Osaka Securities Exchange
, Japan
. Shares are sold in 1 gram gold units, with a minimum purchase of ten units. The fund is not backed by physical gold but by bond
s traded in London which are linked
to the price of gold.
, a Mumbai
-based mutual fund house, launched Gold BeES on the National Stock Exchange of India
. The name is short for "Gold Benchmark Exchange-traded Scheme." Shares are sold in approximately 1 gram gold units. The scheme's assets are 90-100% physical gold, and up to 10% money market
instruments
, securitised
debt
s (up to 5%), and bonds
.
listed Gold Exchange Traded Fund on the National Stock Exchange of India
. The fund states that its objective is "to provide investment returns that, before expenses, closely correspond to the performance and yield of the gold prices or gold related instruments." Every unit of UTI Gold Exchange Traded Fund approximately represents one gram of pure gold. Units allotted under the scheme will be credited to investors’ demat account
s.
launched ETFS Gold which tracks the DJ-AIG Gold Sub-Index.
The New Fund Offer (NFO) open for subscription from October 19 and close on November 2, 2011.
The New Fund Offer price is Rs 100 for cash at a premium equivalent to the difference between the allotment price and face value of 100/- each. Allotment price would be approximately equal to the price of 1 gram of Gold.
The Scheme does not offer any Plans for investment.
The minimum investment amount is 10,000 and in multiples of Rs. 1 thereafter.
Entry and exit load charge will be nil for the scheme.
The scheme will invest 95% to 100% of assets in gold and gold related instruments and upto 5% of assets in debt and money market instruments.
The Benchmark Index will be domestic price of physical Gold
- Optimum Yield Gold http://www.247wallst.com/2008/02/leveraged-gold.html. ETNs are exchange-traded notes, which differ from exchange-traded funds (ETFs).
Exchange-traded fund
An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE...
s (ETFs), closed-end fund
Closed-end fund
A closed-end fund is a collective investment scheme with a limited number of shares. It is called a closed-end fund because new shares are rarely issued once the fund has launched, and because shares are not normally redeemable for cash or securities until the fund liquidates.Typically an...
s (CEFs) and exchange-traded notes (ETNs) that aim to track the price of gold
Gold as an investment
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...
. Gold exchange-traded product
Exchange-traded product
An exchange-traded product is a derivatively-priced security which trades intra-day on a national stock exchange. ETPs are typically benchmarked to indices, stocks, commodities, or may be actively managed...
s are traded on the major stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
s including Zurich, Mumbai
Bombay Stock Exchange
The Bombay Stock Exchange is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was 1.63 trillion as of December 2010, making it the 4th largest stock exchange in Asia and the 8th largest...
, London
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
, Paris
Paris Bourse
The Paris Bourse is the historical Paris stock exchange, known as Euronext Paris from 2000 onwards.-History and functioning:...
and New York
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
. , physically backed funds held 2,062.6 tonnes of gold in total for private and institutional investors. Each gold ETF, ETN, and CEF has a different structure outlined in its prospectus
Prospectus (finance)
In finance, a prospectus is a document that describes a financial security for potential buyers. A prospectus commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements,...
. Some such instruments do not necessarily hold physical gold. For example, gold ETNs generally track the price of gold using derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
.
History
The first gold exchange-traded product was Central Fund of Canada, a closed-end fund founded in 1961. It later amended its articles of incorporation in 1983 to provide investors with an exchange-tradable product for ownership of gold and silver bullion. It has been listed on the Toronto Stock ExchangeToronto Stock Exchange
Toronto Stock Exchange is the largest stock exchange in Canada, the third largest in North America and the seventh largest in the world by market capitalisation. Based in Canada's largest city, Toronto, it is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities...
since 1966 and the AMEX
American Stock Exchange
NYSE Amex Equities, formerly known as the American Stock Exchange is an American stock exchange situated in New York. AMEX was a mutual organization, owned by its members. Until 1953, it was known as the New York Curb Exchange. On January 17, 2008, NYSE Euronext announced it would acquire the...
since 1986.
The idea of a gold exchange-traded fund was first conceptualized by Benchmark Asset Management Company Private Ltd
Benchmark Asset Management Company Private Ltd
-Introduction:Benchmark Asset Management Company Pvt Ltd. is a SEBI registered Asset Management Company launched in June 2001. BAMC is an asset management company in India with primary focus on indexing...
in India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
when they filed a proposal with the SEBI
Securities and Exchange Board of India
The Securities and Exchange Board of India is the regulator for the securities market in India.-History:It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament...
in May 2002. However it did not receive regulatory approval at first and was only launched later in March 2007. The first gold ETF actually launched was Gold Bullion Securities, which listed 28 March 2003 on the Australian Stock Exchange
Australian Stock Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
. Graham Tuckwell, the founder and major shareholder of ETF Securities
ETF Securities
ETF Securities is a global company based in London, UK, specialising in managing exchange-traded funds , Exchange Traded Commodities and Exchange Traded Currencies - History :...
, was behind the launch of this fund and enlisted N.M. Rothschild & Sons (Australia) Ltd, Citibank and Deutsche Bank as market makers on the ASX.
Fees
Typically a commission of 0.4% is charged for trading in gold ETFs and an annual storage fee is charged. U.S. based transactions are a notable exception, where most brokers charge only a small fraction of this commission rate. The annual expenses of the fund such as storage, insurance, and management fees are charged by selling a small amount of gold represented by each share, so the amount of gold in each share will gradually decline over time. In some countries, gold ETFs represent a way to avoid the sales tax or the VAT which would apply to physical gold coinGold coin
A gold coin is a coin made mostly or entirely of gold. Gold has been used for coins practically since the invention of coinage, originally because of gold's intrinsic value...
s and bar
Gold bar
A gold bar is a quantity of refined metallic gold of any shape that is made by a bar producer meeting standard conditions of manufacture, labeling, and record keeping....
s.
In the United States, sales of a gold ETF are treated as sales of the underlying commodity and thus are taxed at the 28% capital gains
Capital gains tax
A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...
rate for collectibles, rather than the rates applied to equity securities
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
.
Central Fund of Canada and Central Gold Trust
The Central Fund of Canada and the Central Gold Trust are closed-end funds headquartered in CalgaryCalgary
Calgary is a city in the Province of Alberta, Canada. It is located in the south of the province, in an area of foothills and prairie, approximately east of the front ranges of the Canadian Rockies...
, Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, mandated to keep the bulk of their net assets in precious metals, with a small percentage of cash. The Central Fund of Canada holds primarily a mix of gold and silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, while the Central Gold Trust holds primarily gold.
The custodian of the precious metals assets of both funds is the main Calgary branch of CIBC
Canadian Imperial Bank of Commerce
The Canadian Imperial Bank of Commerce is one of Canada's chartered banks, fifth largest by deposits. The bank is headquartered at Commerce Court in Toronto, Ontario. CIBC's Institution Number is 010, and its SWIFT code is CIBCCATT....
. Both funds are considered especially safe because of their published codes of governance
Governance
Governance is the act of governing. It relates to decisions that define expectations, grant power, or verify performance. It consists of either a separate process or part of management or leadership processes...
and ethics
Ethics
Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc.Major branches of ethics include:...
, the Central Fund's history of operation since 1961, and the funds' simple prospectus
Prospectus (finance)
In finance, a prospectus is a document that describes a financial security for potential buyers. A prospectus commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements,...
es which equate shares of the closed-end funds with real units of ownership in the trusts. As of October 2009, the Central Fund of Canada held 42.6 tonnes of gold and 2129.7 tonnes of silver in storage, and the Central Gold Trust held 13.6 tons of gold in storage.
Claymore Gold Bullion ETF
In May 2009 Canadian-based Claymore Investments launched Claymore Gold Bullion ETF . As of November 2010 the fund held 10.4 tonnes in gold assets.Exchange Traded Gold
Several associated gold ETF's are grouped under the name Exchange Traded Gold. The Exchange Traded Gold funds are sponsored by the World Gold CouncilWorld Gold Council
The World Gold Council is a non-profit association of the world's leading gold mining companies, established in 1987 to promote the use of gold. It aims to stimulate demand for gold from industry, consumers, and investors. The Council's Chief Executive Officer is Aram Shishmanian, former head of...
, and as of June 2009 held 1,315.95 tonne
Tonne
The tonne, known as the metric ton in the US , often put pleonastically as "metric tonne" to avoid confusion with ton, is a metric system unit of mass equal to 1000 kilograms. The tonne is not an International System of Units unit, but is accepted for use with the SI...
s of gold in storage. Exchange Traded Gold securities are listed on multiple exchanges worldwide by various ETF providers, including:
SPDR Gold Shares
SPDR Gold SharesSPDR Gold Shares
SPDR Gold Shares is part of the SPDR family of exchange-traded funds managed and marketed by State Street Global Advisors...
marketed by State Street Global Markets LLC, an affiliate of State Street Global Advisors
State Street Global Advisors
State Street Global Advisors is the investment management division of State Street Corporation and the world’s second largest asset manager, with $1.9 trillion in assets under management as of June 2010....
, accounts for over 80 percent of the gold within the Exchange Traded Gold group. As of 2009, SPDR Gold Shares is the largest and most liquid
Market liquidity
In business, economics or investment, market liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value...
gold ETF on the market, and the second-largest exchange-traded fund
Exchange-traded fund
An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE...
(ETF) in the world.
Stock market listings:
- United States , Japan , Hong Kong and Singapore (SGXSingapore ExchangeSingapore Exchange Limited is an investment holding company located in Singapore and providing different services related to securities and derivatives trading and others. SGX is a member of the World Federation of Exchanges and the Asian and Oceanian Stock Exchanges FederationSingapore Exchange...
:GLD 10US$)
The SPDR Gold Trust ETF (GLD) holds a proportion of its gold in allocated form in London at HSBC
HSBC
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...
, where it is audited twice a year by the company Inspectorate. GLD has been criticized by Catherine Austin Fitts and Carolyn Betts for its extremely complex structure and prospectus
Prospectus (finance)
In finance, a prospectus is a document that describes a financial security for potential buyers. A prospectus commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements,...
, possible conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
in its relationships with HSBC and JPMorgan Chase which are believed to have large short position
Position (finance)
In financial trading, a position is a binding commitment to buy or sell a given amount of financial instruments, such as securities, currencies or commodities, for a given price....
s in gold, and overall lack of transparency. GLD has been compared with mortgage-backed securities and collateralized debt obligations. These problems with SPDR Gold Trust are not necessarily unique to the fund, however as the dominant gold ETF the fund has received the most extensive analysis.
Gold Bullion Securities, ETFS Physical Gold and ETFS Physical Swiss Gold
ETF SecuritiesETF Securities
ETF Securities is a global company based in London, UK, specialising in managing exchange-traded funds , Exchange Traded Commodities and Exchange Traded Currencies - History :...
"Gold Bullion Securities" (previously marketed by Lyxor Asset Management) listings:
- Australia , Belgium, France , Germany , Italy, Netherlands and United Kingdom ( and )
Similar to Gold Bullion Securities, ETF Securities’ ETFS Physical Gold and ETFS Physical Swiss Gold are also backed by allocated gold bullion. They later launched ETFS Physical Swiss Gold Shares and ETFS Physical Asian Gold Shares on the New York Stock Exchange for US investors seeking geographical and custodian diversification.
ETF Securities’ physical gold ETCs — ETFS Physical Gold (PHAU), ETFS Physical Swiss Gold (SGBS) and Gold Bullion Securities (GBS) — are all backed by “allocated” gold bars – uniquely identifiable bars which carry no bank credit risk. The precious metal bars are held in trust in London by the Custodian HSBC Bank USA N.A., the world’s leading Custodian for ETCs. The metal held with the Custodian must conform to the rules for Good Delivery of the London Bullion Market Association (LBMA). Securities are only issued once metal is confirmed as being deposited into the Company’s bullion account with the Custodian. Consistent with allocated gold, no precious metal is borrowed, loaned out nor does it earn any income.
Dubai Gold Securities and NewGold
- Dubai Gold Securities (Sharia compliantIslamic bankingIslamic banking is banking or banking activity that is consistent with the principles of Islamic law and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees for loans of money...
) (NASDAQ Dubai:GOLD) - ABSAAbsa Group LimitedThe Absa Group Limited is the largest consumer bank in South Africa.- Overview :Absa is based in Johannesburg and listed on the JSE Limited and is one of South Africa's largest financial institutions...
"NewGold" debentureDebentureA debenture is a document that either creates a debt or acknowledges it. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note...
s
Goldist ETF
Goldist ETF (ticker symbol: GLDTR) was launched by Finansbank in September 2006 on the Istanbul Stock ExchangeIstanbul Stock Exchange
The Istanbul Stock Exchange is the only corporation in Turkey for securities exchange established to provide trading in equities, bonds and bills, revenue-sharing certificates, private sector bonds, foreign securities and real estate certificates as well as international securities. The ISE was...
.
iShares Gold Trust
The iShares Gold Trust was launched by iSharesIShares
iShares are a family of exchange-traded funds managed by BlackRock. The first iShares were known as WEBS but were since rebranded.Each iShares fund tracks a bond or stock market index...
on 21 January 2005 and is listed on the New York Stock Exchange and Toronto Stock Exchange . As of July 29, 2010, the fund claimed to hold 90.88 tonne
Tonne
The tonne, known as the metric ton in the US , often put pleonastically as "metric tonne" to avoid confusion with ton, is a metric system unit of mass equal to 1000 kilograms. The tonne is not an International System of Units unit, but is accepted for use with the SI...
s of gold in storage. According the prospectus, trading in the fund may be suspended if COMEX gold trading is restricted or gold delivery is not possible. Some writers have expressed doubts that iShares has sufficient gold inventory to back its existing warehouse receipts. One of the main differences between iShares and SPDR Gold Trusts is that iShares creates roughly 100 shares from every ounce of gold, versus the 10 shares per ounce created by SPDR. This makes iShares more accessible for day traders or small investors to play the gold market.
Julius Baer Physical Gold Fund
In October 2008 Swiss & Global Asset Management (formerly Julius Baer Asset Management) launched JB Physical Gold Fund which invests in physical 12.5 kg gold bars (around 400 ounces). The ETF has four unit classes traded in different currencies: CHFSwiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
, EUR
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
, USD
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
and GBP
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
.
Precious Metals Bullion Trust
On August 14, 2009 Brompton Funds Management Limited launched Precious Metals Bullion Trust . The Fund invests in physical gold, silver and platinum bullion bars which are stored on a fully allocated, insured and physically segregated basis in Canada, in the treasury vaults of the Bank of Nova Scotia, a Canadian Schedule 1 bank. PBU.UN publishes its “Good Delivery” standard bar holdings on a monthly basis on its website and units can be redeemed quarterly at Net Asset Value for cash with no limitations. As the physical bullion held by the Fund is entirely unencumbered, unitholders may also choose to redeem quarterly for whole bars of physical gold, silver and platinum bullion (subject to minimum redemption amounts).Sprott Physical Gold Trust
Sprott Asset Management launched the Sprott Physical Gold Trust as a closed-end fund on February 26, 2010. It is traded on the NYSE Arca and the Toronto Stock Exchange . The fund holds physical gold, stored at the Royal Canadian MintRoyal Canadian Mint
The Royal Canadian Mint produces all of Canada's circulation coins, and manufactures circulation coins on behalf of other nations. The Mint also designs and manufactures: precious and base metal collector coins; gold, silver, palladium, and platinum bullion coins; medals, as well as medallions and...
. PHYS publishes its inventory of Good Delivery gold bars on the web, and (uniquely among gold ETFs) allows shares to be redeemed for whole bars. As LBMA bars weigh between 350 and 430 troy ounces, physical redemption is limited to such increments. Regardless, the provision for physical redemption lends credibility to the fund's claim of holding unencumbered physical gold, especially as of 2010 when funds such as SPDR Gold Shares with elaborately structured holdings are under scrutiny. As of June 2010, the Sprott Physical Gold Trust held 582,417 ounces of gold, plus about $9 million of other assets.
ZKB Gold ETF
The ZKB Gold ETF was launched on 15 March 2006 by Zürcher Kantonalbank. The fund invests exclusively in physical 12.5 kg gold bars (around 400 ounces). The ETF has four unit classes traded in different currencies: CHFSwiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
, EUR
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
, USD
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
and GBP
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
.
Source Physical Gold P-ETC
Source, the specialist provider of exchange traded products partnered with BofA Merrill Lynch, Goldman Sachs, JP Morgan, Morgan Stanley and Nomura, listed the Source Physical Gold P-ETC (SGLD) on the London Stock Exchange in June 2009. The product has also been cross-listed on the SIX Swiss Exchange (SIX)in November 2010.SGLD trades in US dollars and has raised over US$1.1 billion in assets to date.
Each Gold P-ETC is a certificate which is secured by gold bullion held in J.P. Morgan Chase Bank’s London vaults. The vast majority of gold bullion is held in allocated gold bars. Any residual value that cannot be split into standard gold bars will be put into unallocated gold. This is placed in a segregated account with J.P. Morgan Chase Bank acting as Custodian and Deutsche Bank as Trustee. The investment return is achieved by holding gold bullion which is valued daily at the London PM fixing price.
One of the main advantages of this product is the annual management fee, which at 0.29% is considerably lower than comparable competing products. SGLD has achieved UK reporting status, which provides for preferential tax treatment in the United Kingdom.
db Physical Gold ETC
db Physical Gold ETC was launched by Deutsche BankDeutsche Bank
Deutsche Bank AG is a global financial service company with its headquarters in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets...
in July 2010.
Nomura Gold-Price-Linked ETF
On 10 August 2007, Nomura Asset ManagementNomura Holdings
Nomura Holdings, Inc. is a Japanese financial holding company, and a principal member of the Nomura Group.In October 2008 the company acquired Lehman Brothers Holdings's investment banking and equities unit in Asia and Europe and kept on most of its employees. Nomura paid $225 million for the...
launched the Gold-Price-Linked ETF (code "1328") on the Osaka Securities Exchange
Osaka Securities Exchange
is the second largest securities exchange in Japan, in terms of amount of business handled. As of 31 December 2007, the Osaka Securities Exchange had 477 listed companies with a combined market capitalization of $212 billion. The Nikkei 225 Futures, introduced at the Osaka Securities Exchange in...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
. Shares are sold in 1 gram gold units, with a minimum purchase of ten units. The fund is not backed by physical gold but by bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
s traded in London which are linked
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
to the price of gold.
RBS Physical Gold ETC
Royal Bank of Scotland N.V. launched RBS Physical Gold ETC in April 2010.Xetra-Gold
Xetra-Gold was launched by Deutsche Börse Commodities in December 2007.Hybrid products
Hybrid products hold mostly physical gold, but also hold other financial instruments such as gold futures, bonds or money market funds.Benchmark Gold BeES
On 19 March 2007 Benchmark Asset Management Company Private LtdBenchmark Asset Management Company Private Ltd
-Introduction:Benchmark Asset Management Company Pvt Ltd. is a SEBI registered Asset Management Company launched in June 2001. BAMC is an asset management company in India with primary focus on indexing...
, a Mumbai
Mumbai
Mumbai , formerly known as Bombay in English, is the capital of the Indian state of Maharashtra. It is the most populous city in India, and the fourth most populous city in the world, with a total metropolitan area population of approximately 20.5 million...
-based mutual fund house, launched Gold BeES on the National Stock Exchange of India
National Stock Exchange of India
The National Stock Exchange is a stock exchange located at Mumbai, Maharashtra, India. It is the 9th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization...
. The name is short for "Gold Benchmark Exchange-traded Scheme." Shares are sold in approximately 1 gram gold units. The scheme's assets are 90-100% physical gold, and up to 10% money market
Money market
The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. Trading in the money markets involves Treasury bills, commercial paper, bankers' acceptances, certificates of deposit,...
instruments
Financial instruments
A financial instrument is a tradable asset of any kind, either cash; evidence of an ownership interest in an entity; or a contractual right to receive, or deliver, cash or another financial instrument....
, securitised
Securitization
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation , to...
debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
s (up to 5%), and bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
.
UTI Gold Exchange Traded Fund
On 17 April 2007 UTI Mutual FundUnit Trust of India
Unit Trust of India is a financial organization in India.Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s public sector banks were...
listed Gold Exchange Traded Fund on the National Stock Exchange of India
National Stock Exchange of India
The National Stock Exchange is a stock exchange located at Mumbai, Maharashtra, India. It is the 9th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization...
. The fund states that its objective is "to provide investment returns that, before expenses, closely correspond to the performance and yield of the gold prices or gold related instruments." Every unit of UTI Gold Exchange Traded Fund approximately represents one gram of pure gold. Units allotted under the scheme will be credited to investors’ demat account
Demat account
The term "demat", in India, refers to a dematerialised account for individual Indian citizens to trade in listed stocks or debentures in electronic form rather than paper, as required for investors by the Securities Exchange Board of India . In a demat account, shares and securities are held...
s.
ETFS Gold
In September 2006 ETF SecuritiesETF Securities
ETF Securities is a global company based in London, UK, specialising in managing exchange-traded funds , Exchange Traded Commodities and Exchange Traded Currencies - History :...
launched ETFS Gold which tracks the DJ-AIG Gold Sub-Index.
IDBI Gold ETF
IDBI Mutual Fund has launched IDBI Gold Exchange Traded Fund, an open ended Gold Exchange Traded Scheme. The investment objective of the scheme is invest in physical Gold and Gold related instruments with the objective to replicate the performance of Gold in domestic prices. The ETF will adopt a passive investment strategy and will seek to achieve the investment objective by minimizing the tracking error between the Fund and the underlying asset .The New Fund Offer (NFO) open for subscription from October 19 and close on November 2, 2011.
The New Fund Offer price is Rs 100 for cash at a premium equivalent to the difference between the allotment price and face value of 100/- each. Allotment price would be approximately equal to the price of 1 gram of Gold.
The Scheme does not offer any Plans for investment.
The minimum investment amount is 10,000 and in multiples of Rs. 1 thereafter.
Entry and exit load charge will be nil for the scheme.
The scheme will invest 95% to 100% of assets in gold and gold related instruments and upto 5% of assets in debt and money market instruments.
The Benchmark Index will be domestic price of physical Gold
PowerShares DB Gold ETF and ETNs (PowerShares/Deutsche Bank)
Tracks the performance of certain index moves inside the Deutsche Bank Liquid Commodity IndexDeutsche Bank Liquid Commodity Index
The Deutsche Bank Liquid Commodity Index was launched in February 2003.It tracks the performance of six commodities in the energy, precious metals, industrialmetals and grain sectors. The DBLCI has constant weightings...
- Optimum Yield Gold http://www.247wallst.com/2008/02/leveraged-gold.html. ETNs are exchange-traded notes, which differ from exchange-traded funds (ETFs).
- DB Gold (gold ETF)
- DB Gold Double Long (long leveraged gold ETN)
- DB Gold Short (short gold ETN)
- DB Gold Double Short (short leveraged gold ETN)
See also
- Digital gold currencyDigital gold currencyDigital gold currency is a form of electronic money based on ounces of gold. It is a kind of representative money, like a US paper gold certificate at the time that these were exchangeable for gold on demand. The typical unit of account for such currency is the gold gram or the troy ounce,...
- Gold as an investmentGold as an investmentOf all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...
- Official gold reservesOfficial gold reservesA gold reserve is the gold held by a central bank or nation intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders , or trading peers, or to secure a currency....
- Silver exchange-traded product
External links
- Exchange traded gold, by World Gold CouncilWorld Gold CouncilThe World Gold Council is a non-profit association of the world's leading gold mining companies, established in 1987 to promote the use of gold. It aims to stimulate demand for gold from industry, consumers, and investors. The Council's Chief Executive Officer is Aram Shishmanian, former head of...