When it debuted seven and a half years ago, the VanEck Merk Gold Trust (OUNZ) blazed a trail among physically backed gold exchange traded funds.
OUNZ became the first U.S.-listed ETF to offer actual delivery of physical bullion when an investor sells shares in the fund. The strategy resonates with some gold bugs, as highlighted by OUNZ’s $570.7 million in assets under management.
OUNZ “seeks to provide investors with a convenient and cost-efficient way to buy and hold gold through an exchange traded product with the option to take physical delivery of gold,” according to VanEck.
These days, OUNZ is proving its pioneering spirit again, but many investors may not know why. OUNZ is emerging as a gold ETF with socially responsible and sustainability characteristics at a time when those investment styles are sweeping over the equity-based funds landscape.
“The gold bars held by OUNZ are so-called ‘London Bars’. These are the large gold bars institutions and central banks use to trade and store gold. London Bars are subject to rules set by the London Bullion Market Association (LBMA),” says Axel Merk of Merk Investments. “In 2012, the LBMA introduced its Responsible Sourcing Program. The program ‘follows the five-step due diligence framework set out in the OECD Guidance and requires Good Delivery refiners to demonstrate their efforts to combat money laundering, terrorist financing and human rights abuses, and respect the environment globally.’”
How various commodities are sourced has become increasingly important to consumers in recent years. For example, it’s common for Starbucks and other coffee chains to highlight that their beans are sourced from fair trade compacts. Likewise, some jewelers make it a point to tell customers that they don’t sell “blood diamonds.”
Those are just two examples, but they are proof positive that consumers apply sustainability to everyday buying habits. That’s transferring to the investment landscape in significant fashion. In fact, OUNZ is all the more relevant because gold, like diamonds, has a history of being mined in some countries with dubious human rights records. However, miners have long been working to improve their sustainability track records, and OUNZ is the one gold ETF emphasizing that movement.
“Long before sustainability was a consideration for many investors, many gold miners had been responsible in terms of how they treat the environment and how they support the communities in which they operate,” concludes Merk. “The Responsible Sourcing Program helps formalize and audit best practices with regards to both mining and money laundering. By holding responsibly sourced gold in OUNZ, we hope sustainability-conscious investors will consider whether gold may help diversify their portfolios.”
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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.