Low cost access to physical gold bullion
ETFS Physical Gold (ASX code: GOLD) offers low-cost access to physical gold via the stock exchange and avoids the need for investors to personally store their own bullion.
GOLD offers investors a simple, cost-efficient and secure way to access gold by providing a return equivalent to the movements in the Australian dollar price of gold less a daily management fee.
GOLD is backed by physical allocated gold bullion held by JPMorgan Chase Bank, N.A. (the Custodian) in London. Only metal that conforms with the London Bullion Market Association's (LBMA) rules for Good Delivery can be accepted by the custodian. Each physical bar is segregated, individually identified and allocated which means there is no credit risk. Investors can choose to redeem units for the physical holdings.
GOLD is an exchange traded commodity ("ETC") that can be created and redeemed on demand (by Authorised Participants). It trades on the stock exchange just like a share and is settled and held in ordinary brokerage accounts.
Why Consider GOLD?
Low-cost access to physical gold bullion
Gold is often uncorrelated with other assets classes and is commonly used for portfolio diversification purposes
Gold has historically performed well when other assets have been volatile and is often used as an event risk hedge.
Gold is traditionally used as a store of value and is often seen as a hedge against inflation.
GOLD units can be redeemed directly with the issuer for the underlying bullion
Liquid and transparent
Where is the metal stored?
The physical gold bullion for GOLD is held in the vault(s) of JPMorgan Chase Bank, N.A. in London. The vault is audited twice a year by auditor Inspectorate. All audit reports are made available in the Resources section of the GOLD product page. Each gold bar in the vault is itemised in a bar-list which is also available, here.
How is the management fee paid?
Each unit in GOLD comes with an entitlement to an amount of physical bullion. This amount was 0.093888096 fine troy ounces as at 1 January 2020. The entitlement is reduced daily by a management fee of 0.40% per annum. The exact metal entitlement per unit is published on the ETF Securities website daily.
How do I redeem units for the physical metal?
To redeem for physical gold, an investor needs to:
Complete and send a redemption form
Open an unallocated bullion account with an authorised bullion dealer and
Pay a redemption fee of $1,000 for each redemption.
Depending on the quantity of the order, investors may find that selling units in the secondary market is a more cost-efficient option, especially for small quantities.
How can I use GOLD in a portfolio?
Gold has a low to negative level of correlation with other asset classes, such as equities and fixed income, and can therefore be used to enhance a portfolio’s overall risk/return characteristics through the benefits of diversification.
Gold has historically performed well during periods of high equity market volatility due to its safe-haven status and can therefore be used as an event risk hedge.
For centuries gold has been used as a store of value and is independent of the value of any fiat currency. As such, gold is commonly cited as a hedge against inflation.
Gold can be used as a tactical investment based on its own fundamentals, which relate to its unique supply and demand characteristics. Supply relates to both mine production and available above-ground stock. Demand primarily comes from:
Consumers; in the form of jewellery, bars and coins,
Industrial users; such as electronics component manufacturers
Investors; including direct holders and ETF investors, and
Central banks; who maintain large gold reserves.
|Total Return (%) the Fund||Total Return (%) benchmark||Tracking difference||Tracking error|
|3 Year p.a.||14.81%||15.27%||-0.46%||0.05%|
|5 Year p.a.||10.36%||10.80%||-0.44%||0.06%|
|10 Year p.a.||5.78%||6.21%||-0.42%||0.05%|
|Since inception p.a.||9.06%||9.47%||-0.41%||0.04%|