The Royal Mint is set to become the first sovereign mint in Europe to launch a physically backed gold ETC.
Anne Jessopp, CEO of The Royal Mint.
The ETC is being brought to market in collaboration with HANetf, an independent white-label ETF issuer, and is expected to debut in early 2020.
It will be listed on stock exchanges in the UK, Italy, and Germany.
Physical gold associated with the product will be stored in The Royal Mint’s vault, a purpose-built precious metal storage facility in South Wales that also accommodates the production of Royal Mint Bullion.
Milestone
Anne Jessopp, CEO of The Royal Mint, commented, “This is a milestone moment for The Royal Mint as we prepare to launch our first financially listed product and reinvent what it means to be a Mint in the modern age.
“Over recent years The Royal Mint has successfully launched a range of precious metals products as we look to reinvent our business and appeal to new customers. This gold-backed ETC marks an exciting new chapter for The Royal Mint and for the historic business of gold trading. For thousands of years, gold has been recognized worldwide as the ultimate means of trading and storing wealth, ensuring a level of confidence, trust, and security with each transaction with The Royal Mint.”
Jatin Patel, Head of Wealth Management at The Royal Mint, added, “By launching a gold-backed ETC we are offering investors across Europe a compelling new product for their portfolios, safe in the knowledge that they’re working with one of the UK’s most trusted organisations and that every ounce of gold is securely held in our vault.”
Nik Bienkowski, co-Founder and co-CEO at HANetf, said, “We are very excited to confirm our partnership with The Royal Mint. This is a huge milestone for both organizations and is testimony to the vision and innovative spirit of the Royal Mints’ leadership team who recognized early on the opportunities in ETCs.”
Whilst the ETC will be The Royal Mint’s first proprietary listed product, it is not its first foray into the world of exchange-traded products. The mint already has a relationship with ETF issuer WisdomTree, whereby owners of its LSE-, Xetra-, Euronext Paris-, and Borsa Italiana-listed Gold Bullion Securities (GBS LN / GBSS LN) product can exchange their holdings for actual physical gold bullion coins – specifically Sovereigns and Britannias – produced by The Royal Mint for a fee of 4.5%.
Portfolio benefits
Exposure to gold has historically offered important benefits to investors’ portfolios. The commodity can act as a hedge against inflation, while its safe-haven status provides a degree of protection from market volatility and geopolitical risk.
The current investment climate has driven allocations to the yellow metal higher. Gold-backed ETFs globally attracted $6.0 billion net inflows during August as investors sought to buffer portfolios against economic concerns, trade tensions, and the risk of a ‘no-deal’ Brexit.
Established gold products such as the ETFS Physical Gold (PHAU LN) (set to be renamed WisdomTree Physical Gold) and Invesco Physical Gold ETC (SGLD LN) have benefitted from greater demand for safe-haven exposures. There has also been a clear trend towards newer, lower-cost ETCs, which have been gaining market share.
The Amundi Physical Gold ETC (GOLD FP), which launched in July 2019 with an expense ratio of just 0.19%, has since grown its assets under management to more than $620 million.
It is yet unclear what price tag The Royal Mint and HANetf will affix to its gold ETC.