If you’re a gold ETF investor, and you own the asset as a diversifier in a broader portfolio, it may not matter to you to be able to take physical possession of your gold. Owning shares of, say, the SPDR Gold Trust (GLD | A-100) may be good enough portfolio insurance for you.
But last year’s launch of the Merk Gold Trust (OUNZ | D-100) is proving that not every gold investor is the same. And we found one who walked us through the special redemption features that OUNZ brings to the table.
Indeed, OUNZ brought to market the novel feature that allows investors of any size to convert shares of the ETF for actual gold. GLD, by comparison, allows only authorized participants to take delivery, and only by redeeming whole creation units—or a minimum block of 100,000 shares. That’s about $11.45 million of gold at today’s share price.
OUNZ, on the other hand, allows redemptions of any size, for a fee.
Coming on its first anniversary this week, OUNZ has already delivered nearly 100 ounces of physical gold to a handful of investors, who have put Axel Merk’s redeem-for-gold feature to the test. OUNZ is still small, with about $60 million in assets, compared with GLD’s $28 billion in total assets. But it seems to be getting traction, albeit at a slow pace.
We had the chance to catch up with one such investor, Travis, who lives in Ohio. (We are not using his last name, upon his request.) Travis told us he likes precious metals as safe-haven assets, and owns gold as part of his retirement portfolio.
“I have very real concerns for the sustainability of our economy and more simply, our entire way of life,” Travis told us. “When you really dig into our complete dependence on unsustainable systems such as energy sources, consumption of natural resources and population growth, you will see we have a huge predicament in maintaining the current levels of consumption, let alone keeping them growing.”
The challenges we face go beyond that, he adds, pointing to climate change, and a debt-based money system that’s already “near the tipping point with national, state and local debt levels at critical levels,” he said.
“Banks that are too big to fail, credit default swaps and debt levels everywhere are all larger than ever,” he said. “There are strong reasons why the Fed has done QE 1-3 and why interest rates are still at zero.”