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Gold ETCs experience record growth
20/09/07
- ETFS Physical Gold increases by 240%
- Gold ETCs AUM breaks through $300 million
- $500 million invested in precious metal ETCs in 12 months
ETFS Physical Gold (PHAU) has seen a 240% increase in assets in the past seven weeks as a result of significant investor interest in gold and increased knowledge about commodities investing. Total Assets under management (AUM) in gold backed ETCs now exceeds $300 million. Total AUM invested in precious metals ETCs is now above $500 million. The increased interest in gold ETCs has been caused by the recent financial market turbulence.
ETF Securities’ physical precious metal ETCs have been designed to provide investors with a secure, simple and cost efficient way to access the precious metals market without the necessity of taking physical delivery of metal, and to buy and sell that interest through the trading of a security on a regulated stock exchange. The introduction of ETCs is intended to lower many of the barriers such as access, custody, and transaction costs, which have prevented some investors from previously investing in precious metals. They provide investors with a return equivalent to movements in their spot price less a small management fee which accrues daily.
Since their listing on the London Stock Exchange in April 2007, these precious metal ETCs have been listed on four other major European stock exchanges: Deutsche Borse, Euronext Amsterdam, Euronext Paris and Borsa Italiana.
The precious metal ETCs available are:
| ETC | LSE Code |
| ETFS Physical Gold |
PHAU |
| ETFS Physical Platinum |
PHPT |
| ETFS Physical Palladium |
PHPD |
| ETFS Physical Silver |
PHAG |
| ETFS Physical PM Basket |
PHPM |
| ETFS Gold |
BULL |
| ETFS Silver |
SLVR |
| ETFS Precious Metals DJ-AIGCISM |
AIGP |
All of the physical precious metal ETCs are backed by allocated metal – uniquely identifiable bars which carry no bank credit risk – the gold bars are held in trust in London by the Custodian HSBC Bank USA N.A., who is the world’s leading Custodian for ETCs with over $16 billion of precious metals being held for such products. All physical metals held with the Custodian must conform to the rules for Good Delivery of the London Bullion Market Association (LBMA) and London Platinum Palladium Market (LPPM). Securities are only issued once metal is confirmed as being deposited into the Company’s bullion account with the Custodian.
The other precious metal ETCs track DJ-AIG Commodity IndicesSM that replicate a total return from investing in precious metal futures.
The management of ETF Securities created the world’s first Exchange Traded Commodity (ETC) in 2003. Similar to Exchange Traded Funds (ETFs), ETCs are open-ended securities which can be created or redeemed by Authorised Participants or market makers. Investors can buy and sell the new ETCs through regulated brokers or approved market makers. ETCs can be traded with all the same order types available to equities, including market, limit and stop orders. They can also be shorted through stock borrowing or CFDs. The minimum trade size is one security and settlement is T+3 (trade date plus three business days) in CREST. In addition, these are the only physically-backed precious metal ETCs eligible for UK pension accounts including PEP, ISA, CTF and SIPP.
Commenting on the response of investors for ETF Securities’ physically-backed precious metal ETCs, Nik Bienkowski, Head of Listing and Research, said:
"There has been an increase in demand for ETCs linked to the price of commodities and particularly gold and precious metals. This demand has come from investors seeking to diversify their portfolios away from equities and bonds and into other asset classes.
Many independent studies have shown that gold and precious metals have low to negative correlation with equities and importantly, in times of stress this low correlation is shown to hold. Given the current financial market uncertainty, we have seen strong inflows into physically backed gold ETCs as investors have sought the benefits of gold’s safe haven characteristics.
Overall there has been a huge surge in global demand for ETCs with over $26 billion invested in the last three years, with 65% ($17 billion) invested in gold. Compared to other asset classes, gold is one of the oldest or if not, the oldest asset class, it is indestructible, fungible, easy to store, liquid, and unlike cash, allocated gold is not subject to the credit risk of a bank."
For further information, please contact:
Claire Burston / Roman Townsend
Penrose Financial
Tel: +44 (0) 20 7786 4886 / 4875
Notes to editors:
To obtain a copy of the prospectus please visit the website at www.etfsecurities.com/msl
The management of ETF Securities Limited pioneered the development of Exchange Traded Commodities (ETCs), in 2003. Building on its success ETF Securities created the world’s first entire ETC platform which was listed on the London Stock Exchange in September 2006. Since then, ETF Securities has listed its entire range of 42 ETCs on Europe’s major exchanges (Frankfurt, Paris, Amsterdam and Italy) with each exchange creating a separate ETC segment.
To learn more about ETF Securities go to: www.etfsecurities.com
This advertisement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any transferable securities to be issued by ETFS Metal Securities Limited or any other securities, nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by means of the prospectus and recipients of this advertisement who are considering a purchase of securities following distribution of the prospectus in connection therewith are reminded that any such purchase should be made solely on the basis of the information contained in such prospectus and any supplementary prospectus(es). This advertisement does not constitute any recommendation regarding the securities of ETFS Metal Securities Limited.
The communication of this press release is not being made by, and this press release has not been approved by, an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”). Accordingly this press release is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this press release or any other document issued in connection with the offer and sale of the ETCs is only being made to and directed at those persons in the United Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or any person to whom it may otherwise lawfully be made (all such persons together being referred to as “relevant persons”). The communication of this press release (or any other document issued in connection with the offer and sale of the ETCs) must not be acted upon or relied upon by persons who are not relevant persons. Persons distributing this press release must satisfy themselves that it is lawful to do so. All applicable provisions of the FSMA must be complied with in respect of anything done in relation to the ETCs in, from or otherwise involving the United Kingdom.
This is not an offer of securities for sale in the United States. Metal Securities have not been and will not be registered under the US Securities Act or any other applicable law of the United States. Metal Securities are being offered and sold only outside the United States to non-US persons in reliance on the exemption from registration provided by Regulation S of the US Securities Act or in transactions exempt from the registration requirements of the Securities Act. The Issuer has not been and does not intend to become registered as an investment company under the Investment Company Act and related rules. If the Issuer determines that any Security Holder is a Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the Investment Company Act), the Issuer may redeem the Metal Securities held by that Security Holder in accordance with the provisions described in the Prospectus. Metal Securities may not be purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any entity whose underlying assets include "plan assets" of any of the foregoing by reason of an employee benefit plan's or other plan's investment in such entity, which employee benefit plan, plan or entity is subject to Title I of ERISA or section 4975 of the Code or any United States Federal, state, or local law or non-United States law that is substantially similar to the prohibited transaction provisions of section 406 of ERISA or section 4975 of the Code (any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer may redeem the Metal Securities held by that Security Holder in accordance with the provisions described in the Prospectus."
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