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Gold/Mining/Energy : A to Z Junior Mining Research Site -- Ignore unavailable to you. Want to Upgrade?

To: 4figureau who wrote (3898)	4/2/2003 12:02:02 PM
From: 4figureau	Read Replies (1) \| Respond to of 5423

From Minesite: Date : April 2, 2003 World Gold Council Looks Like Coming Third To Australia And China In Race To Develop Gold Investment Instrument. The listing of Gold Bullion Securities on the Australian Stock Exchange at the end of last week is an oddity. Its development is claimed to be a joint initiative between the World Gold Council and an Australian company called Gold Bullion Ltd. The only overt link between the two is the fact that Simon Village, managing director of investment services at the WGC, is on the board of the new company. A look at the World Gold Council website, however, reveals not a word about the project. Maybe it is miffed that the Aussies have beaten it to the punch as we are still waiting for its much vaunted gold investment instrument that was promised in February…. then March … and now it is April and still no word. In fact there has been virtually no word from Chris Thompspn’s team since it took over last October, though CEO James Burton did manage to get a one liner in the press release announcing the listing of Gold Bullion Securities. The difference between Gold Bullion Securities and other forms of gold investment where value is based on a promise by a bank or other party to pay in gold is that each security will represent 1/10 troy ounces in the form of London Good Delivery bars, and can be redeemed for gold (through an approved dealer) or cash. No minimum trading amount is stipulated and the with monthly management fee to cover all corporate, storage and insurance changes is only 0.02 per cent. The physical gold will be insured and held in London vaults by the custodian bank HSBC Bank USA, and all receipts and payments of gold are ‘ring fenced’ for optimum security. This is an most important development in gold’s evolution as an asset class. As the cult of equity dies investors are seeking wealth preservation amid a world of low interest rates and falling stock markets. It's easy enough to buy shares - about 50 per cent of Australians have their own portfolios of various sizes – but very few have ever traded a metal. Now gold has been securitised. A recent PricewaterhouseCooper’s report by actuary Dr David Knox found that the introduction of gold bullion into an investment portfolio in the last five or ten years would have reduced the volatility of investment returns as it tends to be negatively correlated with other major asset classes such as shares, property and fixed income. Newmont's Pierre Lassonde, cheerleader for the global gold industry, claimed some time ago that a 'gold equity' could create up to a 1000 tonnes of investment demand a year. The pace will have to quicken up a shade in Australia for this to happen as only 700 ounces of gold were bought in the first day of trading which is equivalent to 7,000 Gold Bullion Securities. However that is equivalent to nearly A$ 400,000 and it is bound to take a bit of time before this new form of investment is accepted. It will be interesting to see whether anything rubs off on Australian gold shares. Increased investment demand and a higher gold price would be positive in the first instance; and an analyst with RBC Dominion Securities in Australia suggests that the correlation between gold and particularly Australian listed gold equities may increase as investors can arbitrage between the two more easily. This raises the possibility that investors might decide to switch from gold equities to securitized gold bullion, but this does not seem very likely. Instead, this is a whole new asset class unlocking dormant investor demand. China is not going to be left behind in the race to enable individuals to invest in gold. According to Zhao Jianping, deputy director of the retail business department of the Bank of China, a paper investment instrument business is being created by his bank. He told the newspaper Asia Pulse that. at the early stage the bank would not trade in physical gold as the clients of his bank are mainly those with foreign exchange income and remittance. The trading of paper gold will be conducted through the individual foreign exchange trading system which will be convenient for clients to operate. What he really seems to be saying is that the trading of physical gold is somewhat complicated in China and clients might miss chances when gold prices fluctuate. The investment world now waits with bated breath to see what the World Gold Council will eventually produce. One of the problems seems to be the difficulty of conforming with the regulatory paraphernalia of the New York Stock Exchange which means that nothing can be said about the proposed instrument in advance in case this is construed as a recommendation to invest. How childish can you get? It might have been better to have listed the instument in London first to set a precedent and taken it to New York later. The new team at the WGC, however, is very US oriented. minesite.com