Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: marek_wojna who wrote (96091)	10/20/2003 12:56:47 AM
From: The Vet	Respond to of 116764

marek, didn't you go to the link I posted and read what was there? GOLD.ASX is backed by real physical metal. The metal is stored in the vault of the HSBC bank in London and is allocated at 1/10 of an ounce for every share. These are not gold certificates or paper gold. There is no fractional coverage and stock can be increased only by adding more gold and can be decreased if holders redeem their shares directly for gold. Sale of the stock on the exchange simply means that the gold already there changes ownership from the seller to the buyer. They don't take your money and then buy gold some time later. The shares are created only AFTER the physical gold is placed in their account by the market makers who then have new shares issued, one share for every 1/10 ounce deposited and verified by the bank. Then the Market Maker (or any other large investor who deposits physical gold as London Good Delivery bars can sell the shares so issued on the ASX. However each share is not a share in a company. It is more like a redeemable receipt directly able to be traded on the stock exchange or alternatively exchanged for 1/10 ounce of real gold in London. If you don't have enough shares to redeem a whole bar then you can redeem a portion but that will sold and settled in cash at the London price fix for that day. Expenses for storage are taken out monthly by reducing the amount able to be redeemed by .01% a month on each share. That's way cheaper than you could store and insure the gold privately and you have the advantage of being able to trade any portion of your holding of gold on the exchange for the same brokerage as any stock transaction. As far as the $100 fee to redeem. I assume that is to cover the administrative expenses of collecting and canceling the stock redeemed and to pay the bank for the trouble of opening the vault and bringing up your bar of gold to the counter.. Banks don't work for nothing you know and $100 AUD is not much when compared to COMEX or similar delivery fees.