The IRS treats sales of other gold-backed ETFs as collectibles, meaning investors are subject to tax rate that is even more punitive than traditional capital gains.

According to Merk, investors file for a delivery application, instruct their broker to submit their OUNZ shares to take delivery of gold and the physical gold would be shipped to the investor.

However, traders do incur a processing and delivery fee, including 2.5% on 10 ounce bars or London bars, 3.5% on one ounce bars, 6% on once ounce coins and 7% on one ounce American gold eagles, with a minimum charge of $7,000, depending on the type of gold. For example, an investor would be charged $7,000 to exchange $100,000 in American eagles, and fees would be higher if the investor is exchanging ETF shares for a smaller amount of gold. [New Merk Gold ETF Debuts]

OUNZ is up 1% since coming to market and has attracted $50.6 million in assets.

ETF Trends editorial team contributed to this post.