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Aussie gold ETF and ETP offering enjoys the gold rush

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The recent gold rush has brought attention to gold ETPs based on sovereign mints. Australia’s Perth Mint details its gold ETP and ETF offerings.

The recent gold rush has brought attention to gold ETPs based on sovereign mints. Australia’s Perth Mint details its gold ETP and ETF offerings.

Tell me more about the Perth Mint’s ETF offerings?

The Perth Mint has long been at the forefront of product development in the precious metals space and was one of the first organisations in the world to list a gold exchange traded product (ETP). This was done with the launch of Perth Mint Gold (ASX: PMGOLD), on the Australian Securities Exchange back in 2003.

To give international investors further access to gold, The Perth Mint also listed its gold backed exchange traded fund (ETF) in the US in July 2018 (NYSE Arca: AAAU).

When were they launched?

As above, PMGOLD was launched in the Australian market in 2003 and AAAU followed suit to be launched in the United States in 2018.

Assets?

PMGOLD has a market value of just over AUD500 million as at end May 2020.

AAAU has a market value of more than USD300 million. 

Performance?

PMGOLD has performed very well in the last year in particular, mirroring the increase in the AUD gold price, which it is designed to track. In the year to end April 2020, PMGOLD was up over 40 per cent, while over three and five years the annualised returns for the product were 15.44 per cent and 11.57 per cent respectively.

As above, The Perth Mint Physical Gold ETF closely tracks the gold price, however in USD and not AUD as with PMGOLD.

Who buys them?

Perth Mint ETPs like PMGOLD are popular with a range of investors, from first time buyers through to pension funds, family offices and HNWs. In Australia, growth is being led by those who self-directed their retirement portfolios (called SMSFs) with these investors turning to gold as a hedge against a volatile equity market and as a ‘cash alternative’ given interest rates are now below zero in real terms.

We are seeing investors being very attracted to AAAU as a result of our three major advantages over traditional gold ETFs, namely:

  1. Geographical diversity – gold held by the fund is predominantly held in Perth, Western Australia, a geopolitically stable region away from the traditional storage centres of London and New York.
  2. Government guarantee – all the gold held in the fund is independently insured and backed by a guarantee from the Government of Western Australia.

Investors also have the option to redeem their shares for physical gold coins and bars produced by The Perth Mint and have them delivered to their door. 

​The above factors have proved attractive to individual investors and fund managers alike, as well as our competitive pricing of 0.18 per cent pa.

Has the recent gold rush seen your assets increase?

Yes. Investments in PMGOLD have been increasing notably for over 18 months.  Since September 2018, when the gold rally started in earnest, holdings have increased by more than 130 per cent. The product itself has grown over 250 per cent over this time period and is now greater than AUD500 million in size. This increase is a result of the inflows, as well as the more than 50 per cent increase in the AUD gold price, which is now trading above AUD2,500 per ounce.

AUM for AAAU has also increased significantly in recent months, by over USD100 million since the start of the year.

Why are investors buying gold from you?

Trust is a major factor in any investment and particularly in gold. The Perth Mint ETPs, including PMGOLD are the only listed products in the world underpinned by gold which is government guaranteed.  In addition, the physical metal backing the investments is stored in non-bank vaults in Perth, a feature many investors see as safer than many alternatives including the traditional storage hubs of London and New York. PMGOLD is also at the lower cost end of the ETF range, which means investors keep more of the return generated by gold for themselves, rather than paying it away in product fees.

As mentioned earlier, our three major distinctive features of AAAU are appealing to investors, and the current equity market volatility of recent months has had investors looking for traditional potential safe haven assets.

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