Searle it is interesting to see Kaplan "talking his book" when he says "As an example, the only listed security that represents physical gold ownership, without any leverage or margin, is Gold Bullion, currently listed in Australia, although there are plans to "roll out" such exchange traded funds, or perhaps similar securities, in other countries. This fund has been operative for many months now, has attracted international interests, and yet, has currently only 6.5 tons of gold on its books. The performance has been quite poor, as I expected.
In fact as at the 22nd October GOLD.ASX had 231,190.785 ounces (7.19 tonnes)of gold (not 6.4 as Kaplan quoted) which means investors in Australia have bought about a ton of gold a month since it's inception, and on a falling POG in Australian dollar terms. Also it is not easy for most investors to trade the Australian market except for Australian residents so it is almost certain that the majority of that demand comes from the Australian investor.
I am always suspicious when anyone quotes obviously out of date figures to support an assertion. Kaplan could easily have checked what the real gold holdings were on GOLD.ASX as they are updated twice a month on their web site.
With a population less than a sixth of that of Japan (127 million) with a GDP per capita of $27,958.26 , compared to Australia (19 million) with a GDP per capita of $27,012.09 ,has invested in a single gold fund in six months, almost three times the last years total imports of gold into Japan! (using Kaplan's figures)...
If you assumed that exchange traded gold like GOLD.ASX was available in Japan and was traded at a similar rate to the Australian product then you could expect Japan alone in one year would invest in almost 100 tons of gold.
Extrapolating the same figures to the USA with a GDP per capita of $35,935.02 and a population of over 280 million will give a projected figure of around 285 tons of gold purchased in a year if the Australian rate is maintained in the US.
On that basis alone US, Japan and Australia would account for about 400 tons of gold a year purchased and held in Exchange traded gold. The quantities actually traded obvious exceed those figures as I am working on the actual gold purchased and retained by the fund not the turn over of the shares. If you add volatility, a bull market and the British and Europeans into this mix it is easy to envisage an active market with over 1000 tons of real physical gold traded and held in real good delivery bars, not just as receipts of doubtful convertibility.
And I must remind you that this exercise is based on demand during a rather quiet bear market in gold in Australian dollar terms. When GOLD.ASX was launched gold was trading near to $600 AUD an ounce and it was gradually dropped to the current level of $535 AUD an ounce.
Kaplan would love Exchange Traded Gold to be a failure, but these figures belie his wishes. He knows that an Exchange Traded product will cut into the excessive margins enjoyed by traditional brokerages and gold market makers and the ease and reduced costs of the transactions and of of obtaining delivery will cut into his business....
Sources:-
goldbullion.com.au
nationmaster.com |
