ETF Securities partners with The Royal Mint

Aug 26th, 2013 | By | Category: Commodities

ETF Securities, a London-headquartered provider of exchange-traded commodities (ETCs), has partnered with The Royal Mint to offer investors the opportunity to exchange holdings in Gold Bullion Securities (GBSS) for investment-grade gold bullion.

ETF Securities partners with The Royal Mint

ETF Securities has partnered with The Royal Mint to enable investors to swap their holdings in the exchange-listed Gold Bullion Securities (GBSS) for physical gold coins.

Gold Bullion Securities was launched by ETF Securities in 2004, becoming Europe’s first physical gold ETC. Today, the product has assets under management of approximately $4.6 billion.

The ETC is backed by physical allocated gold that conforms to the London Bullion Market Association’s rules for Good Delivery. Each physical bar is segregated, individually identified and allocated, and held in the vaults of HSBC.

The product is listed on the London Stock Exchange, Deutsche Börse, Borsa Italiana and NYSE Euronext and was designed to offer security holders a simple, cost-efficient and secure way to gain investment exposure to the gold market.

The new arrangement takes things a step further. Rather than simply providing exposure to the precious metal, investors in the ETC will now be able to exchange their security holdings for actual physical gold bullion coins – specifically Sovereigns and Britannias – produced by The Royal Mint for a fee of 4.5%.

Owned by the UK government, The Royal Mint is one of the world’s oldest mints, with a history dating back to circa 900AD. In addition to minting Britannias and Sovereigns, it is responsible for making and distributing the UK’s circulating currency and is also the world’s leading export mint, making circulating coins, blanks and medals for over 60 countries worldwide.

Commenting on the initiative, Frank Spiteri, Head of Retail Distribution Strategy at ETF Securities, said: “Product innovation is a key element of our philosophy and as such this partnership with The Royal Mint is a natural fit. It has become increasingly important to reassure investors that their securities are backed by physical gold. This new service enables our retail clients to switch their holding of GBS for Sovereigns and/or Britannias, knowing that their gold coins can be safely stored with or delivered by a UK government-owned and regulated entity. Our website offers investors a number of tools to calculate the number of gold coins they could receive for a given number of securities.”

Shane Bissett, Director of Bullion at The Royal Mint, added: “We are delighted to be working with ETF Securities on this project. The Royal Mint bullion business has been growing rapidly since 2011. As part of the offering for 2013, The Royal Mint has developed new specification bullion products that make both Sovereign and Britannia coins a compelling choice for the bullion coin market. The VAT-free status of gold coins in the United Kingdom, and the fact that they are capital gains tax free for UK residents, as announced by the Chancellor of the Exchequer, is an added attraction.”

Richard Samuels, Bullion Manager at The Royal Mint, further commented: “Part of our bullion strategy at The Royal Mint is to enable existing investors in precious metals access to our bullion products through schemes such as this. We are very pleased to work with ETF Securities on this new product initiative to add a further option for clients to redeem and vault physical bullion from The Royal Mint.”

The initiative bears resemblance to a similar scheme, known as the Canadian Gold Reserves Programme, launched by the Royal Canadian Mint in October 2011. Under this scheme The Royal Canadian Mint, Canada’s equivalent to The Royal Mint, issued a series of exchange-traded receipts (ETR) that provide evidence of direct ownership of physical gold bullion held in the custody of the mint at its facilities in Ottawa, Ontario.

Holders of Canadian Gold Reserves ETRs, which are listed and traded on the Toronto Stock Exchange, own the actual gold rather than a unit or share in an entity that owns the gold and, like the ETF Securities/Royal Mint initiative, are entitled to redeem their ETRs for physical gold products in the form of 99.99% pure gold bars or coins produced by the mint.

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