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Gold ETCs top volume and asset growth tables for 2008
19/01/09
- ETF Securities’ Physical Gold ETCs now the largest ETC in Europe with $4.8bn in assets, up 55% in 2008.
- Physical gold ETC is one of most liquid ETFs/ETCs in Europe, trading $14.5bn in 2008 up 230% from 2007
- Gold was star performer in 2008 with a 44% return in GBP terms, outperforming equities
- GBS & PHAU in top three ETCs/ETFs on the LSE
ETF Securities Limited has seen total Assets Under Management (AUM) in its physical gold ETCs grow in the past year to $4.8 billion, up $1.75 billion. The 55% increase in assets is due to gold’s dominant position as a liquid safe haven asset while not being subject to credit risk. In addition, gold’s low to negative correlation with equities helped it to dominate 2008 performance tables, with a 4% increase in USD and 44% increase in GBP. ETFS Physical Gold (PHAU) grew by $1.2 billion and Gold Bullion Securities (GBS) grew by $550 million during 2008. The 55% increase in physical gold ETC assets compares to a 5% fall in overall European ETF assets in 2008.
Both physical gold ETCs, ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS) are also in the top three ETFs / ETCs traded on the London Stock Exchange (LSE). Combined, they traded $14.5 billion in 2008 across five European exchanges, trading an average of $58 million per day. This was up 230% from 2007 when they traded $4.3 billion. Enabling physical gold ETCs to be so liquid is the fact that the underlying, LBMA physical Good Delivery bars trade around $6 billion per day, making gold more liquid than any equity on the planet. Globally, physical gold ETCs have now accumulated $30 billion in assets and trade up to $1 billion per day. In Europe, ETF Securities’ physical gold ETCs are listed on five exchanges and traded in three currencies.
In today’s world where investors are worried about credit risk, interest rates are extremely low, and governments are reflating and building up debt aggressively, gold is proving to be a popular investment. There has been a strong rise in demand for physical gold in all forms - World Gold Council figures show that demand for physical gold (including ETCs) in 3Q 2008 was the highest on record. There has been high demand growth for ETCs because of their high liquidity, ease of access, no premiums due to shortages (as has been seen for coins and bars in many instances), and of course their safety and ease of storage.
ETF Securities’ physical gold ETCs are all backed by “allocated” gold bars – uniquely identifiable bars which carry no bank credit risk. The precious metal bars are held in trust in London by the Custodian HSBC Bank USA N.A., the world’s leading Custodian for ETCs. The metal held with the Custodian must conform to the rules for Good Delivery of the London Bullion Market Association (LBMA). Securities are only issued once metal is confirmed as being deposited into the Company’s bullion account with the Custodian. Consistent with allocated gold, no precious metal is borrowed, loaned out nor does it earn any income.
Last year, ETF Securities also announced that its physically backed precious metals platform issued by ETFS Metal Securities Limited is Shariah compliant. The ETCs include ETFS Physical Gold, ETFS Physical Silver, ETFS Physical Platinum, ETFS Physical Palladium and ETFS Physical PM Basket. The ETCs are the first platform of Shariah compliant ETCs globally. The ETCs provide investors access to investments consistent with Islamic principles. The Shariah compliance had resulted in a great deal of interest, particularly from investors located in the Middle East, North Africa and Asia.
ETF Securities now offers more than 130 ETCs with over $7 billion in assets. The ETCs provide investors with a wide variety of investment strategies with ETCs offering physical, long, forward, leveraged and short exposure to all commodity sectors. ETCs are simple to access as they are traded in three currencies (Euros, USD and Sterling) and listed on five major European Exchanges including the London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Borse and Borsa Italiana. Most recently, oil ETCs including ETFS Crude Oil (CRUD) and ETFS Brent Oil (OILB) have begun to trade up to $100 million per day.
Commenting, Nik Bienkowski, Chief Operating Officer, at ETF Securities, said:
“In the last two months of 2008 and continuing this year, investors are seeking assets which are liquid, secure and transparent. Alternative investments should help to protect portfolios due to the their low correlation with equities and bonds, however bans on redemptions and other well published issues have tarnished many alternative investments such as hedge funds and real estate. Exchange traded commodities (ETCs) solve these issues.
“ETCs are as liquid as the underlying market, they are transparent with detailed disclosure and with many ETCs being collaterlised, they are also secure. It is therefore not surprising that our physical gold ETCs have grown to approximately $5 billion in assets, with AUM up 55% and volumes up 230% in 2008. More recently, investors have been pouring into long ETCs tracking oil such as ETFS Crude Oil and ETFS Brent which have seen inflows of $600 million in nine weeks.”
Commenting, Nicholas Brooks, Head of Research and Investment Strategy, at ETF Securities, said:
“The strong demand for physical gold such as ETCs is not surprising given the macroeconomic situation today. ETFS Physical Gold and Gold Bullion Securities grew by 55% in 2008 alone, becoming one of the most dominant ETC/ETF in Europe. With financial instability high, counterparty risk a serious issue, governments boosting money supply at an unprecedented rate, and government debt levels expected to grow rapidly over the next few years, there are good reasons for conservative investors and the general public to want to hold a portion of their assets in gold. Gold’s price performance and demand last year certainly fits this trend with gold one of the best performing assets in 2008 and also over five and ten years. Last year, gold was up 4% in USD and 44% in GBP.”
For further information, please contact:
Helen Burden
Tel: +44 (0) 20 7448 4330
Email: helen.burden@etfsecurities.com
ETF Securities continues its series of conference calls for finance professionals:
Gold and the Metals Market: Fundamental Drivers & Outlook
Date: 27th January 2009
Time: 11:00am and 15:00pm London Time
This call will discuss:
- Recent Price and Flow Trends
- The Big Picture: Setting the Macro Context
- Investment Characteristics of Precious and Base Metals
- Fundamental Drivers of Precious and Base Metals
- Summary and conclusions
- Question and answer session
To register your place today: www.etfsecurities.com/nl/events/etfs_events_calls.asp
Notes to Editors:
ETF Securities Ltd is a provider of Exchange Traded Commodities (ETCs) and Exchange Traded Funds (ETFs). ETF Securities is independently owned is the European market leader in ETCs. The management of ETF Securities pioneered the development ETCs, with the world's first listing of an ETC, Gold Bullion Securities in Australia and London in 2003 and then the world's first entire ETC platform which was listed on the London Stock Exchange in September 2006. ETF Securities has most recently launched the largest platform of thematic sector ETFs in Europe providing exposure to European firsts such as Coal, Steel, Shipping and Nuclear Power.
To learn more about ETF Securities go to: www.etfsecurities.com
This press release 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 securities (together the "Securities")of ETFS Commodity Securities Limited, ETFS Metal Securities Limited or ETFS Oil Securities Limited or any shares (the "Shares") of ETFS Fund Company public limited company (the "Fund") or any other shares or 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 relevant prospectus (plus any supplements thereto) in the case of the Securities or the prospectus together with the relevant sub-fund supplement in the case of the Shares (in each case the "Prospectus") and recipients of this advertisement who are considering a purchase of Securities or Shares following distribution of the Prospectus are reminded that any such purchase should be made solely on the basis of the information contained in such Prospectus. This advertisement does not constitute any recommendation regarding the Securities or the Shares.
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 Shares or Securities 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 Shares or Securities) must not be acted upon or relied upon by persons who are not relevant persons. The Fund is a collective investment scheme for the purposes of the FSMA and is a recognised scheme for the purposes of the FSMA. 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 Shares or Securities in, from or otherwise involving the United Kingdom.
This is not an offer of securities for sale in the United States. The Shares and Securities have not been and will not be registered under the US Securities Act or any other applicable law of the United States. The Shares and 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. None of ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited and ETFS Fund Company public limited company (each an "Issuer") has been or intends to become registered as an investment company under the United States Investment Company Act of 1940 (as amended) (the "Investment Company Act") and related rules. Neither the Shares nor the Securities or any beneficial interest therein may be reoffered, resold, pledged or otherwise transferred in the United States or to US persons. If an Issuer determines that any holder of shares is a US Person or any holder of Securities 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 Shares or Securities (as the case may be) held by that Security Holder in accordance with the provisions described in the Prospectus. Neither the Shares nor the Securities may 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 Securities or Shares held by that person in accordance with the provisions described in the relevant Prospectus.
"Dow Jones," "AIG®" "Dow Jones-AIG Commodity IndexSM," "DJ-AIGCISM", "Dow Jones-AIG Commodity 3-Month Forward Index" are service marks of Dow Jones & Company, Inc. and American International Group, Inc. ("American International Group"), as the case may be, and are licensed for use for certain purposes by ETF Securities Ltd. ETCs based on the DJ-AIGCISM or related sub-indices (including single commodity sub-indices) or 3-Month Forward Indexes are not sponsored, endorsed, sold or promoted by Dow Jones, AIG Financial Products Corp. ("AIG-FP"), American International Group, or any of their respective subsidiaries or affiliates, and none of Dow Jones, AIG-FP, American International Group, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product(s).
ETF Securities Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited, Gold Bullion Securities Limited and ETFS Fund Company PLC are each regulated by the Jersey Financial Services Commission
To obtain a copy of the prospectus please visit the website at www.etfsecurities.com
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