Just as gold is re-entering the public imagination, a brand new gold ETF is launching today. It’s the ETFS Physical Swiss Gold Shares, and though there are other gold ETFs already, they’re really playing up the fear trade, so to speak.
WSJ: The fund is designed to cater to gold buyers who want to guard against extreme situations. The British company will hold its gold in Switzerland, which is “probably one of the most independent countries in terms of political influence,” said William Rhind, head of sales and marketing for ETFS Marketing, the marketing arm for ETF Securities.
The vast majority of gold is stored in London and the U.S. SPDR Gold Shares, the world’s largest gold fund, has all its bars stored with HSBC Holdings in London. The new fund will store its metals in Zurich in vaults managed by J.P. Morgan Chase.
“With regards of terrorism, war and all sorts of extreme events, the feeling is that Switzerland is probably the safest venue to store gold,” Mr. Rhind said. Gold holdings in Switzerland have increased in the past 18 months, leading some vault-service providers to scramble for storage space, he said.
We don’t quite get it. It’s one thing if you want to buy gold as a speculative bet. But if you’re really the type that sees it as a hedge against calamity (terrorism, war, etc.) are you really going to buy an ETF? Your probably interested in owning direct, physical gold that you can store in places you can access. We highly doubt that in the event of a global war, you’re going to much much luck showing up in Zurich at the J.P. Morgan Chase vaults with a print-out of your E-Trade statement confirming you own 10 shares of ETFS Physical Swiss Gold Shares.
That being said, as a recent chart we ran confirms, the thirst for gold ETFs seems to be growing at an unimaginable rate right now (as evidenced by increase volume under management) so they’re certainly striking while the market’s hot.