New ETF will claim to have gold, silver, platinum, and palladium


9:15p ET Monday, February 8, 2010

Dear Friend of GATA and Gold:

Another exchange-traded fund for precious metals was announced today, this time by ETF Securities USA for a fund that will claim to hold gold, silver, platinum, and palladium all together. The Dow Jones story about it is below.

The fund's registration statement filed with the U.S. Securities and Exchange Commission can be found here --

-- and says the fund will hold unallocated as well as allocated metal, will place its metal with "sub-custodians" as well as custodians, and will do business with, among others, JPMorgan Chase and Goldman Sachs, financial houses not especially associated with devotion to free markets in the precious metals.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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ETF Securities Seeks US Permission For New Metals ETF

By Matt Whittaker
Dow Jones Newswires
via The Wall Street Journal
Monday, February 8, 2010

NEW YORK -- ETF Securities USA has filed with the U.S. Securities and Exchange Commission for permission to launch a U.S.-based exchange-traded fund backed by a basket of physical gold, silver, platinum and palladium.

If allowed to begin trading, the new fund may push up prices for the precious metals.

The filing, which was dated Friday, says the company proposes to create the ETFS Physical PM Basket Shares, to be issued through a trust.

"The investment objective of the trust is for the shares to reflect the performance of the prices of physical gold, silver, platinum, and palladium, in the proportions held by the trust, less the trust's expenses," the filing says.

ETF Securities USA "believes that, for many investors, the shares will represent a cost-effective investment in bullion," the filing says.

The precious metals held by the trust will be valued on the basis of London afternoon fixes for gold, platinum, and palladium and by the silver fix at approximately noon London time.

The company expects that the shares will trade on the New York Stock Exchange Arca platform, the filing says.

"The shares are designed for investors who want a cost-effective and convenient way to invest in a basket of bullion with minimal credit risk," the filing says.

The fund will track the spot price of the underlying metal minus management fees and is backed by physical bullion, meaning that physical metal is put into storage to back shares that trade like a stock but track the price of the commodity.

ETF Securities notes that since the fund will take metal off the market, it could cause bullion prices to rise, especially for the relatively small platinum and palladium market, where supply and demand constraints exist that are generally not present for gold and silver.

"Purchasing activity associated with acquiring the bullion required for deposit into the trust in connection with the creation of baskets may temporarily increase the market price of gold, silver, platinum and palladium, which will result in higher prices for the shares," the filing says.

If the SEC declares the new fund effective, ETFS Physical PM Basket Shares would join the company's four other U.S. physically backed precious metals exchange-traded funds.

Holdings in ETFS Physical Swiss Gold Shares (SGOL), ETFS Physical Silver Shares (SIVR), ETFS Physical Platinum Shares (PPLT), and ETFS Physical Palladium Shares (PALL) recently topped $1 billion.

The platinum and palladium funds began trading Jan. 8 on the NYSE Arca and were the first ETFs for the platinum group metals in the U.S. Since they began trading, some market participants have said that they have created price volatility in the platinum and palladium market.

ETF Securities launched the silver fund in July and the gold fund in September.

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