NEW YORK (TheStreet) -- ETF Securities is adding one more
into the mix, but this time the gold is stored in Singapore.
ETFS Physical Asian Gold Shares
is slated to debut on the
New York Stock Exchange
this Friday under the ticker symbol "AGOL" and ETF Securities is hoping that the lure of gold stored in Asia will help jumpstart investor demand.
The gold will be held by
in a recently purchased vault in Singapore under the London Bullion Market Association's rules for Good Delivery.
The impetus for the ETF, says Will Rhind head of U.S. operations for the company, was new investors not wanting gold that was stored in London (
SPDR Gold Shares
iShares Gold Trust
), the U.S. (IAU) or Switzerland (
ETFS Physical Gold
ETF Securities launched SGOL in September 2009 and currently has $1.13 billion in assets and holds 820,739.304 ounces of gold. These physically backed exchange traded products aren't like closed-end funds, they only buy gold if demand rises and they need to issue more shares. Roughly for every share you own, you own one-tenth of an ounce of gold, but this ratio deteriorates over time as the issuer must sell shares to pay for daily expenses.
Both gold ETFs will be audited bi-annually by an independent third party and all gold bar numbers are published daily on their website.
I asked Rhind on the conference call if two gold ETFs would be dilutive, basically are they overdoing it? Rhind maintains that storing gold in Asia would be "highly complementary" to its Swiss based ETF.
also have reached particular internal holding limits and need other gold options that are not Europe or the U.S.," says Rhind. According to the company, Asian investors have also expressed interest in gold ETFs where the gold is stored locally.
It will be hard to guess how much demand will come from Asia but the region's thirst for gold and gold products has been on the rise, especially on any gold price correction. China alone imported 209.7 metric tons in the first 10 months of 2010, or 7.4 million ounces, and the country has been promoting gold investing and buying by offering different gold funds and giving investors access to overseas products.
Gold ETFs are not typically redeemed for the physical metal, however, as investors must redeem in whole lots, sometimes as much as 50,000 shares, or $6.8 million. Although you don't get to touch the metal, you are taxed like you do. Profits are subject to a 28% collectables fee.
Aside from SGOL and now AGOL, there are two other physically backed gold ETFs: GLD and IAU. GLD is the biggest with $56.5 billion under management and 1,271 tons, while IAU is the cheapest with an expense ratio of 0.25% versus 0.40% for the GLD and 0.39% for SGOL and AGOL.
When asked on the conference call, ETF Securities said it's not interested in lowering its cost to compete for IAU but instead wants to concentrate on offering different products.
IAU has been the popular ETF of late especially as gold prices popped 26% in 2010. The ETF added 37.85 tons in 2010, a 47% increase while the GLD added only 14%.
In the U.S., ETF Securities also offers
ETFS Physical Silver
ETFS Physical Platinum
ETFS Physical Palladium
ETFS Physical Basket
, comprised of all the precious metals, and
ETFS Physical WM Basket
, a basket including silver, platinum and palladium.
Written by Alix Steel in
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