Gold backed Exchange Traded Commodity from the Royal Mint
The Royal Mint has launched the Physical Gold Securities Exchange Traded Commodity (ETC), designed to offer investors a means to access the gold market as it tracks the physical price of gold.
The ETC is the first listed financial product to be backed by The Royal Mint and the first physically gold backed ETC to be launched in partnership with a European Sovereign Mint. The Royal Mint has partnered with specialist ETF issuer, HANetf to issue, manage and distribute the RMAU ETC.
Each ETC is equal to 1/100th of a troy ounce of gold which is approximately $15 per ETC based on today’s price of gold ($1567.89 per ounce as of 11/02/2020).
100% backed by London Bullion Market Association (LBMA) good delivery bars, the physical gold associated with RMAU will be held in The Royal Mint’s purpose-built vault – one of the UK’s most secure sites.
Gold is often regarded as a safe haven investment in times of market stress and investors will now have the option to own an ETC that custodies the gold outside of the financial system. Most other gold ETCs custody their gold at commercial banks so the Physical Gold Securities ETC offers an alternative to investors looking to diversify their custody arrangements.
The ETC’s securities can be redeemed in exchange for physical gold bars and coins, with delivery and storage provided by The Royal Mint.
This ETC allocates gold that has been sourced on a best endeavour basis from the LBMA’s responsible sourcing program. The Management Expense ratio (MER) for the ETC is 0.22% per annum.
Anne Jessopp, chief executive officer of the Royal Mint, said: “This launch is a significant milestone for The Royal Mint as we look to the future and diversify our business for the 21st century. Today we are building on our 1,100 years of heritage and reputation for trust and security to expand into new ventures with the launch of our first ever listed financial product, becoming the first Sovereign Mint in Europe to do so.
“Our precious metals business has gone from strength to strength since its launch five years ago, and the launch of this gold backed ETC further builds on our existing range of Mint precious metal products.”
Jatin Patel, head of wealth management at The Royal Mint commented: “Gold continues to be recognised as the world’s leading means of trading and storing wealth. As one of the UK’s most trusted organisations, we are excited to be able to offer investors yet another way of gaining exposure to gold whilst having the confidence that it is safely stored in our vault.”
Jason Hollands, managing director, business, development and communications at financial planners Tilney Investment Management said: “While you have the security of the Royal Mint behind this and the facility to exchange your ETC for physical gold is a differentiating – but largely cosmetic – feature, the annual costs of 0.22% are quite a premium to the 0.19% ongoing fees on the Invesco Physical Gold ETC. The latter also has full replication, with bullion stored in JP Morgan Chase’s London vaults and therefore is more competitive product for those wanting to allocate to gold as a pure investment position.”
Further reading: Investing in Gold ETFs