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Russia sells dollars and dollar-denominated assets to diversify reserves
11:33a CT Saturday, November 13, 2004
Dear Friend of GATA and Gold:
The CBSMarketWatch story about the new bullion fund
about to trade on the New York Stock Exchange
requires a little prefacing.
* The assertion that there isn't any easy way to buy
real metal without storing it yourself overlooks the
Internet gold depository and payment services like
that of GATA consultant James Turk, GoldMoney.com.
* The security of the gold in the new bullion fund
needs some review -- where it will be held and by
whom, and whether it will be subject to lease. When
that information becomes available, we'll pass it
along.
* Note that the bullion fund is already being
considered as another way of selling gold short.
The bullion fund has evoked mixed opinions at the
New Orleans Investment Conference, where GATA
has sent a large delegation. But there is at least
the hope that, on the whole, it will increase demand
for real gold and not just be more paper gold for
manipulation by the authorities.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Gold rush: ETF expected to launch with metal hitting highs
By John Spence
CBSMarketWatch.com
Saturday, November 13, 2004
http://cbs.marketwatch.com/news/story.asp?guid=%7BACEE9FD8%2DAF5B%
2D409A%2DBA09%2D571813B96D0E%7D&siteid=mktw&dist=
BOSTON -- Investors have long been denied a cost-efficient
way to invest in gold bullion without actually buying the
metal and stashing it away.
At the same time, many institutional investors and mutual
funds are barred from purchasing gold or other precious
metals directly.
However, that will likely soon change as a gold bullion-backed
exchange-traded fund is expected to launch on the New York
Stock Exchange under the ticker symbol "GLD" as soon as
next week.
On Friday, Swiss bank UBS released an offering notification
for the streetTRACKS Gold Trust after the World Gold Council,
the ETF's sponsor, filed its last registration with the Securities
and Exchange Commission earlier in the week.
For the World Gold Council and the fund's marketing agent,
Boston-based ETF player State Street, the introduction of the
first gold ETF appears well-timed as the price of gold hit
16-year highs near $440 an ounce this week. Some traders
and analysts speculated gold may be moving higher on
anticipation of the ETF launch.
Yet Ross Norman, a director at TheBullionDesk.com in
London, said it's too simplistic to attribute the recent upward
movement of gold solely to expectations surrounding the debut.
"The dollar is in decline, and that's really helping gold prices,"
Norman said. "I'm not saying the upcoming ETF is already
factored into the price of gold, but the market has been
expecting the launch of gold ETFs for quite some time."
The World Gold Council first filed the prospectus with the
SEC over a year ago in May 2003. ETF powerhouse Barclays
Global Investors has also filed a gold ETF with the SEC to be
called iShares COMEX Gold Trust. It is slated to list on the
American Stock Exchange.
Both ETFs are designed to reflect the price of gold owned by
the trust, less the expenses of the trust's operations.
The funds will pay their fees by selling off small amounts of
gold bullion. In other words, the fractional amount of physical
gold represented by each share will decrease over the life of
the trust -- an important caveat.
Gold, like artwork, is classified as a "collectible" by the IRS
and is therefore taxed at a higher 28 percent capital gains
rate in the U.S. after being held for more than one year.
According to filings, both ETFs will be structured as grantor
investment trusts rather than registered investment
companies, and expenses will be priced identically at 0.4
percent of assets. The Bank of New York will be the trustee
for both ETFs.
Elsewhere, gold ETFs have already been listed in England,
Australia, and South Africa.
Individual investors wanting to invest directly in gold bullion
have traditionally had to pay the high costs associated with
transporting, insuring, and safely storing it.
Although traditional open-end mutual funds that invest in
gold-mining stocks exist, there is no convenient or efficient
way to invest directly in gold bullion, aside from perhaps
buying gold coins and keeping them in a safe-deposit box
at your local bank.
"Gold has lacked a sensible product that ordinary investors
can buy," Norman said. "Yes, you can buy equity in the
underlying mining companies, but it's been difficult to get
access to the gold market."
Since mining companies are affected by factors not related
to the gold market, they may not provide as good a hedge
against inflation and market shocks, which is one of the
main benefits of owning bullion.
Still, existing precious metals and mining funds have posted
sparkling returns of late in the bull market for gold.
One of the purest plays on gold in the fund world is the $720
million American Century Global Gold, which has a 3-yaer
annualized return of 37.2 percent, while the S&P 500 has
averaged 3.3 percent annually over the same period, according
to investment research firm Morningstar.
The American Century fund's 0.69 percent ratio stacks up very
well against the 1.8 percent category average for precious
metals funds, reports Morningstar.
The $753 million Vanguard Precious Metals and Mining has an
ultra-low expense ratio at 0.55 percent. However, when it
reopened its doors in May 2003 after closing to new buyers
under a flood of investor cash, its mandate broadened to invest
more in mining companies outside gold, such as platinum,
nickel, copper, and iron ore. Additionally, investors need
$10,000 to get into the fund, while ETF investors can buy as
little as one share.
Many observers expect gold ETFs, which would mark the first
time investors could buy the precious metal on an exchange
like a stock, to be a runaway success.
"The gold ETFs could bring a new raft of institutional and
possibly retail investors into the gold market," Norman said.
"I would be shocked if they did not garner $1 billion in assets
in the next year or so, and firmly believe they have the potential
to do much better than that," said Jim Wiandt, editor of the
Journal of Indexes.
Gold has long been a stalwart hedge against falling markets,
and gold ETFs would also allow investors to go short, he
added.
With largely-untapped markets soon gaining access to gold
with the new ETFs, some analysts are expecting gold to
continue its climb.
"Gold is definitely poised, and we think we'll see $450 before
Christmas," Norman said. "This bull run has legs, and we've
yet to see the best."
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com/
Subscription sites:
http://www.lemetropolecafe.com/
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
3033 East 1st Ave., Suite 403
Denver, Colorado 80206
www.USAGold.com
Michael Kosares, Proprietor
US (800) 869-5115
Canada 1-800-294-9462
European Union 00-800-2760-2760
Australia 0011-800-2760-2760
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
----------------------------------------------------
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