A gold ETF that lets you redeem shares for gold


There are others, like the Sprott gold and silver ETFs. But it's good that the idea of redeemability for ordinary investors is catching on and that suspicion of "paper gold" is growing.

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A Gold ETF That Lets You Redeem Shares for Gold

By Lewis Braham
Barron's, New York
Saturday, July 16, 2016

How much is fear worth? That, in a nutshell, is the difficulty in valuing gold. It's the currency of last resort for those who are afraid that all other assets will eventually become worthless. The greater investors' angst, the higher gold's value. Thus it commands a "fear premium" unlike any other asset.

That anxiety can translate into a desire among certain investors to keep physical gold in vaults in their basements, or shoved under their mattresses. If the much-anticipated global financial meltdown or zombie apocalypse occurs, having a bar or two on hand could prove useful -- if not to barter, then to at least bash a zombie over the head. ...

... Dispatch continues below ...


Stacking the Odds for Discovery

By Tommy Humphreys

Greg Beischer and his team at Millrock Resources (MRO-V) didn't spend the depths of the bear market for exploration juniors bemoaning the awful state of things.

Quite the opposite.

"The past three years, even though they've been brutal, were really just the perfect time for a generative exploration company," says Beishcher, Millrock president and CEO, in a CEO.ca feature video. "We were able to acquire assets at very, very low costs."

Recent acquisitions include a dominant group of claims in B.C.'s Golden Triangle with concessions adjacent to Pretium Resources and its Brucejack gold project. ...

... For the remainder of the report, and the video interview, please visit:


If you're among the nail-biting set, this year may be the one to buy the VanEck Merk Gold Trust exchange-traded fund (ticker: OUNZ). With Brexit in the rearview mirror and a contentious presidential election on the horizon, there is no shortage of fear. VanEck Merk is up 26.7% year-to-date, a fraction higher than the largest gold ETF, the $41.7 billion SPDR Gold Trust (GLD).

Both ETFs have identical 0.4% expense ratios. But VanEck has a unique feature that gives it added appeal. Retail investors can redeem their shares in ounces of physical gold that will be delivered to them for a fee. This made the upstart ETF, which has gathered $156 million since its May 2014 launch, very interesting, even during last year's bear market. It had a 46% growth in investor inflows in 2015, according to Morningstar, while the precious-metals sector saw minus 6.4% in outflows.

That's off a small base, but the fact that investors were buying this fund while gold was getting hammered is significant. "Since the launch of SPDR Gold Trust, there have been some in the gold investment community who refer to it in a negative way as 'paper gold,'" says Dave Nadig, FactSet's director of ETFs. "There's a belief system that's somewhat conspiratorial that there's no gold in the vault. Having a sense of physical access to the gold is important to those investors."

Indeed, Axel Merk, who as president of Merk Investments designed the new ETF, consulted the doubting Thomases in the gold blogosphere before launching it. "When we structured this ETF, we wanted to offer what SPDR Gold offers and more," he says. "We think we've designed a better product."

While Van Eck provides flexibility and added safety, it's not the best option for acquiring physical gold directly, especially for small investments. Share exchanges for coins and bars are cost-prohibitive with small transactions because of the minimum fees. For instance, to exchange ETF shares for Australian bars costs $30 an ounce, but for a minimum fee of $1,200. With gold currently at $1,343, you'd lose almost your entire investment for one ounce. But with a 40-ounce conversion -- or $53,720 currently -- your $1,200 fee is 2.2% of your investment, a reasonable outlay for a secure delivery of gold to anywhere in the U.S. from a London-based vault.

So far, only a half-dozen investors have redeemed some 200 total ounces in physical gold, Merk says. "Most people want to keep the ETF but appreciate the functionality," he says. "One delivery we had, the investor said, 'Well, I'm going to take five ounces because I want to test the process in case I want to eventually take more.'" With the geopolitical outlook increasingly uncertain, the ETF's flexibility, despite the exchange costs, may provide just the right level of security that nervous investors need to stay in the game.

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