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The Australian Perth Mint has a new one this week Exchange Traded Fund for gold Announced. This new ETF will be listed on the New York Stock Exchange and will trade under the symbol 'AAAU'.
A special feature of this new investment product are the relatively low management fees of 0.18% on an annual basis and the fact that the management fee is not settled in dollars, but in gold. In doing so, the Perth Mint tries to provide more transparency about the costs and physical gold backing of the fund.
The new investment product of the Perth Mint tries to compete with the World Gold Council's latest gold ETF, which also has only 0.18% per annum in fees. The shares of the new Australian gold ETF can be exchanged for physical gold bars and gold coins from the mint. Another unique feature is that the gold reserves in the vault are guaranteed by the government of Western Australia.
With these features, the Australian gold ETFs are trying to differentiate themselves from competitors, who are less transparent about the gold backing and who offer few opportunities for physical delivery of the precious metal. In the new fund of the Perth Mint, one hundred shares are equal to one troy ounce of physical gold. This means that in the event of a Gold price from $1,200 per troy ounce to $12. It is not yet clear from what volume the mint offers physical delivery and what costs are involved.
According to the director of the Perth Mint, Investing in gold with the launch of this new ETF for a larger target group. Still, investing in shares of an ETF is not the same as buying physical gold. In the second case, you physically own the precious metal, while with shares of an ETF you only have a claim on precious metal. The question is whether that claim can be converted into physical extradition under all circumstances.
Also, this ETF of the Perth Mint can only be traded via the New York Stock Exchange and you cannot access it when this exchange is closed. Investing in shares of an ETF is cheaper than buying physical gold, but on the other hand, you have more counterparty risk.
