The masses have spoken and they demand gold. In response, ETF Securities Ltd. has announced a new gold related exchange traded fund (ETF) that hit the market this morning to capitalize on demand from traders looking for a piece of the increasingly popular precious metal.
The ETFS Physical Swiss Gold Shares began trading on the New York Stock Exchange ARCA, reports Carolyn Cui for The Wall Street Journal. The ETF will track spot gold prices by backing each share with 1/10 of an ounce of physical bullion stored in Switzerland.
ETFS Physical Swiss Gold Shares differs from some other gold ETFs in that the others use futures contracts where there may be counterparty risk if a person fails to honor the commodity contract. PowerShares DB Gold (NYSEArca: DGL) is one such ETF that holds futures contracts. DGL is up 11.4% year-to-date.
The new ETF will be competing against the dominant gold ETF, SPDR Gold Shares (NYSEArca: GLD), currently up 12.6% year-to-date, and the smaller iShares Comex Gold Trust (NYSEArca: IAU), currently up 12.6% year-to-date. The new fund will have an expense ratio of 0.39% while the other two have expense ratios of 0.40%.
William Rhind, head of sales and marketing at ETFS, told us yesterday that the gold is stored in Switzerland, “one of the most independent countries in the world in terms of political influence.” Most gold in other funds is stored in London.
Gold prices have been increasing on concerns over a stock-market pullback and a depreciating dollar. Inflationary fears are also pushing investors toward a flight to hard assets. On Tuesday, gold prices hit $1,006.90 during the trading session and settled at $997.90.
For more information on gold, visit our gold category.
Max Chen contributed to this article.
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.