New Gold ETF Could Be Exchanged for Physical Gold
December 16th 2009 at 6:00am by Tom Lydon
There are several gold-focused exchange traded funds (ETFs), but a new product recently filed with the Securities and Exchange Commission (SEC) could have the most interesting twist yet.
Sprott Asset Management is planning to introduce a new ETF called the Sprott Physical Gold Trust (NYSEArca: PHYS). It’s designed to provide investors with exposure to the physical gold bullion market, reports Rocky Vega on The Daily Reckoning. (Record prices for gold has assets flowing into ETFs).
The lure for investors is that units in the trust can be redeemed for physical gold, as well as a possible trust-related tax rate advantage. The rate would be 15%, vs. 28% for the sale of collectibles held for more than a year. (The latest gold pause may simply be just that).
The trust is aiming to raise up to $575 million and, though it’s much smaller, will compete with the existing gold focused ETFs. (Is gold in a bubble?)
Right now, the dollar is strengthening to a two-month high ahead of tomorrow’s Federal Reserve meeting. There’s been speculation that interest rates will be raised, which could further strengthen the greenback and pressure gold prices. The Federal Reserve, for their part, has said in the past that they intend to keep rates where they are for now. Gold prices are hovering around the $1,100 mark for now.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.