Merk Gold ETF makes first physical delivery

Aug 1st, 2014 | By | Category: Commodities

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The Merk Gold Trust (OUNZ), a deliverable gold exchange-traded fund, has successfully completed its first gold delivery.

Merk Gold ETF (OUNZ) makes first physical delivery

The Merk Gold Trust (OUNZ) launched on the NYSE Arca in May 2014.

The ETF, which launched in May this year, possesses an innovative feature which gives investors the option to take delivery of physical gold in exchange for their shares.

If and when desired, investors may request delivery of gold bars vaulted in London, as well as gold coins that are more commonly desired by individual investors.

On Wednesday, July 16, 2014, such a request was made. An investor submitted 5,406 shares of OUNZ to Merk requesting 54 American Buffalo gold coins to be delivered; the gold was successfully delivered on Tuesday, July 22, 2014.

James Machuga, Merk’s Vice President of Advisor Services, said: “OUNZ allows investors to buy gold like an ETF and request delivery of physical gold at any time; if at some point they would rather hold gold in their hands, they can request delivery. With other gold ETFs, an investor would first have to sell their shares, pay any applicable taxes, then buy coins. With OUNZ, investors take delivery of what they already own, making taking delivery a non-taxable event.”

Axel Merk, President of Merk Investments and Portfolio Manager for the Merk Funds, adds: “When we designed OUNZ, we wanted a gold ETF worthy of its name: we wanted physical gold, not paper. We wanted it to trade like an ETF, tracking the price of gold and most important was that we wanted investors to be able to take delivery of their gold. The gold is held on an allocated basis, which I confirmed when I personally inspected the vault in London last month. We believe the tight bid/ask spread in the market makes OUNZ an attractive investment. In addition, we received a patent on what we believe is a highly scalable delivery process. I’m proud to report that we have now seen that our process works in practice.”

The ETF is listed on the NYSE Arca and has an expense ratio of 0.40%. It currently has more than $50 million in assets.

The Merk product is not alone in giving investors the option to take physical delivery of gold. The Gold Bullion Securities (GBSS), a $3.7 billion physical gold ETP from ETF Securities, also posses such a feature. GBSS allows investors to take delivery of actual physical gold bullion coins – specifically Sovereigns and Britannias – produced by The Royal Mint.

Similarly, the Royal Canadian Mint offers a series of physically backed exchange-traded receipts which give investors the option to redeem their shares for physical gold bullion held in the custody of the Mint at its facilities in Ottawa, Ontario.

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