San Francisco - February 9, 2004. Barclays Global Investors is now the second entity to file an exchange-traded fund based on gold bullion.
On Friday BGI filed with the SEC to launch a new exchange traded fund for gold investors, to be called iShares COMEX Gold Trust. COMEX is the exchange market on gold futures contracts operated by Commodity Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc.
The iShares gold ETF be listed on the American Stock Exchange with the ticker symbol IAU, pending regulatory approval. The objective of the trust is for the value of the iShares to reflect the price of gold owned by the trust at that time, less the trust's expenses and liabilities.
The BGI filing follows a previous SEC filing by Equity Gold Trust to launch a new U.S. gold-bullion based ETF that, if approved, will trade on the NYSE. According to the filing, a share would represent one tenth of an ounce of physical gold.
In 2003 the first gold ETF, Gold Bullion Securities, began trading on the Australian Stock Exchange, it also now trades on the London Stock Exchange.
Investors have long turned to gold in times of market uncertainty, and many conservative investors have held a part of their portfolios in bullion or gold mining stocks. Furthermore, gold is considered the ultimate inflation hedge, and with economic growth surging in much of the world, gold bugs see a fundamental reason for the metal's rise as well. Like the fixed-income and value equity investors of the late 1990s, the precious metals crowd took a beating through the last bull market. Now they're back with a vengeance.
Data as of December 31, 2003. More data and charts available at www.gold.org.
One problem with gold investing has been that it is historically one of the most inconvenient asset classes for an average investor to access, due to the high costs associated with purchasing, transporting, and safely storing it. Yes, there are many gold mining companies and mutual funds that invest in mining companies - even Vanguard has such a fund. And these stocks do, to some extent, capture the price movement of gold. But many companies are hedged against price movement and involved in other mining activities - and well, they're just not gold. However, the problem with buying bullion is about to change in the U.S.
Already, investors in the U.S. can buy gold futures to achieve gold exposure, as well as Total Return Asset Contracts (TRAKRS) futures contracts that give similar exposure to the price movement, but also provide a return component to investors - giving them the benefits of lending gold, as if they were holding the bullion (and had the market power of Central Banks or major bullion dealers). In addition, new exchange-traded funds (ETFs) in Australia and now in the United Kingdom have enjoyed wildly successful launches. These ETFs actually allow investors to hold gold bullion itself, as stacks of real gold bars in London are what underlie the ETF portfolios. Like any ETF, shares can be bought and sold through any broker like a single stock. And they are coming to the USA soon.
Here is the Registration Statement for the Equity Gold Trust's filing to launch a new gold-bullion based ETF that is slated to trade under the ticker symbol GLD on the New York Stock Exchange, with the World Gold Council as sponsor and the Bank of New York as Trustee. Anticipation for the product in the U.S., and trading in the U.K. and Australian products already trading has been so strong, that some veteran gold traders have said that it is pushing up the price of gold globally.