LONDON Aug 23 ETF Securities, a pioneer of
exchange traded funds (ETF) as a tool for investors to buy into
gold at a time when prices were rising, offered to let them swap
shares for coins subject to a fee charged by Britain's Royal
The fund provider teamed up with the Royal Mint to offer
retail investors a chance to exchange shares in its gold-backed
ETF for the mint's Sovereign or Britannia
bullion coins, it said in a statement on Friday.
"These are coins coming from a government-backed
organisation and alleviate some concerns that investors may
have, like 'how do we know there is gold in your vaults?',"
Frank Spiteri, head of retail distribution strategy at ETF
"There's also a tax advantage because gold coins...are
capital-gains-tax free for UK residents and shares are not."
The offer is chiefly designed to allow retail investors to
redeem smaller amount of their holdings in exchange for physical
metal than before, when they could only sell holdings equivalent
to the value of entire 400-ounce gold bars.
"There wasn't a minimum redemption amount but the value of a
whole gold bar was the minimum ... (and) a $750 redemption fee
would apply in exchange for cash," Spiteri said.
UK-based ETF Securities launched its gold ETF Gold Bullion
Securities (GBS) in 2004. The product, listed on the London
Stock Exchange (LSE), is backed by bars held in vaults by HSBC
Bank USA, which acts as custodian, with $4.6 billion of assets
The Royal Mint applies a 4.5 percent fee for exchange of
gold coins for the securities.
According to a calculator based on price, the minimum
number of gold bullion securities that investors could exchange
for 10 Britannia coins as of Friday was 109, and for 25
Sovereign coins it was 64. ()
Gold holdings in global ETFs have sharply
fallen since the start of the year, posting net outflows for the
first time since inception in 2003 at around 600 tonnes so far,
as gold prices dropped below $1,200 an ounce for the
first time in two years.
Lower metal prices have made gold more affordable, prompting
a sharp increase in physical demand for bullion coins and bars
to 900 tonnes in the first six months of the year, compared to
630 tonnes in the first half of 2012, according to World Gold