ETF News & Commentary
SAN DIEGO (ETFguide.com) - Surging gold prices has rekindled interest in the shiny yellow metal. And to help investors to capitalize, ETF Securities Ltd (ETFS) has just launched a new gold ETF that will track the price of gold bullion. Each share represents one-tenth the price of gold bullion’s ounce price.
Rather than investing in gold futures contracts, the ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) holds physical gold which is stored in Switzerland. Commodity regulators have targeted large investors in commodity futures, arguing their large positions distort the price of commodities. However, ETFs that own physical gold aren’t being affected.
After cracking the $1,000 per ounce barrier earlier in the year, gold has been stuck in a tight trading range. More recently, gold prices have begun to rise. Since January 1st, bullion prices have climbed almost 13% compared to a 16.1% rise in S&P 500 stocks (NYSEArca: SPY).
"We are very proud to introduce the first ETF backed by physical gold held in Switzerland to the U.S. market. Investors have been asking us for a long time to develop a product that stores its gold in Switzerland. As a result of that feedback, we are excited to be able to offer investors a new way to invest in the Gold market and an efficient way to geographically diversify their gold holdings,” said William Rhind, Head of Sales and Marketing for ETFS Marketing.
The new gold fund will compete with established gold ETFs like the iShares COMEX Gold Trust (NYSEArca: IAU) and the SPDR Gold Shares (NYSEArca: GLD). While IAU has around $2.4 billion in assets, GLD at $34 billion has a commanding lead. Launched five years ago, GLD was the first gold ETF launched in the U.S.
While SGOL has the same objective of tracking gold’s price as its competitors, its managers purposely chose Switzerland to store its physical gold rather than the popular destination of London. In the case of war or terrorism, Switzerland might fare better from a safety perspective.
According to the prospectus, SGOL's annual expense ratio is 0.39%, which is in the same vicinity as competing gold ETFs.
The launch of the ETFS gold ETF follows the company’s July introduction of a silver fund (NYSEArca: SIVR). Through early September, its silver ETF gathered over $110 million in assets, averaging daily volume of 46,800 shares.
ETFS has approximately $13 billion in assets under management in over 130 products globally.
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