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Gold Council to sell securities in Asia

Gold Council to sell securities in Asia

The World Gold Council, a producer group supported by the biggest miners of the precious metal, will sell securities backed by the bullion in Singapore from October 11, the first such offering in Asia.
The securities, known as an exchange-traded fund, are similar to those traded on the New York Stock Exchange, and will also be called StreetTracks Gold shares, the London-based council said yesterday. Each share on the Singapore Exchange will represent one-tenth of an ounce of gold, and enables a holder to trade the commodity without taking physical delivery of it.
The number of exchange-traded funds has grown dramatically since they were created in 1993, gaining in popularity as they broadened investors' access to different types of asset, including commodities. Commodity prices have surged this year on rising demand from developing countries, including China, and increased interest from institutional and individual investors.
The launch "will increase demand for gold, and it will bolster gold prices," said Ellison Chu, manager for the bullion desk at Standard Bank Asia Ltd. in Hong Kong. "It's more convenient and easier for individual investors" to trade shares in such a fund than to own the metal.
The World Gold Council's members include Toronto-based Barrick Gold Corp., Johannesburg-based Anglogold Ashanti Ltd. and Denver-based Newmont Mining Corp., the world's three leading gold miners.
"There is a long history in terms of gold affinity in the Far East," said James Burton, the council's chief executive officer. The shares would appeal to investors who wanted to have gold in their portfolio, but didn't own it, he said.
The Singapore fund will be marketed by State Street Global Advisors, a unit of State Street Corp., the world's biggest provider of investment services to institutions.
The size of the assets linked to the nine other gold exchange-traded funds in the world, six of which are owned by the council, is about US$11 billion, Burton said in an interview.
"We didn't think that we'd have US$9.5 billion in three years," he said, referring to the council's funds, while declining to forecast future growth rates. The council launched its first gold exchange-traded fund in Sydney in April 2003.
After next week's launch, these securities may also be launched in other Asian countries, including China, he said.
"There will be a time when we go to China," he said. "We need to keep contact with the market there, and then decide when the time is right."
Gold-backed funds "are very important developments in the gold mining industry and for gold prices," Greg Wilkins, Barrick's chief executive officer, said after a speech in Melbourne today. "It has restored gold's legitimacy as a financial investment."


Updated : 2021-02-25 19:31 GMT+08:00