-->US gold ETF begins trading Thursday
By: Dorothy Kosich
Posted: '18-NOV-04 00:00' GMT © Mineweb 1997-2004



RENO--(Mineweb.com) The Boston bureau of CBS Marketwatch reported Wednesday that the first U.S. gold ETF will be launched Thursday by streetTracks Gold Trust (GLD).

Boston-based State Street is the marketing agent for the fund, which has been co-created by the World Gold Trust Services division of the World Gold Council.

On Tuesday, streetTRACKS Gold Trust filed a Form S-1 Registration Statement with the SEC. If the news reports are correct, streetTRACKS Gold Trust will issue up to 120 million gold shares and 2,3 million underwritten shares through UBS Securities LLC. Delivery of the underwritten shares is expected to be made between November 23 and 26, 2004.

The trust is an investment trust, which was formed on November 12, 2004. Its sponsor is World Gold Trust Service, which is wholly owned by the World Gold Council. The trustee is the Bank of New York, which is generally responsible for the day-to-day administration of the trust. The bank will determine the NAV of the Trust on each day the NYSE is open for regular trading, at the earlier of the London PM Fix for the day or 12 P.M. New York Time. HSBC's London vaults will serve as the actual custodian of the gold bullion belonging to the Trust.

The fund allows U.S. investors to invest directly in gold via the exchange-traded security. The World Gold Council's members have provided funding to cover ordinary operating expenses from 2004-2006. The investment objective of the trust is for the shares to reflect the performance of the price of gold bullion, less the trust's expenses.

Blocks of 100,000 shares are redeemable into gold bullion while shares should be initially priced at about 1/10th price of an ounce of gold. The ability to buy and sell in a moment's notices expected to be especially valued by gold investors concerned about the volatility of gold.

The offering of the shares is intended to overcome the logistics of buying, story and insuring gold which have been a barrier for some institutional and retail investors. For instance, pension funds, which have not been able to participate in the gold market, may now purchase and gold shares in the trust.

StreetTRACKS is the brand name of several ETFs managed by State Street Global Advisors. The World Gold Council is expected to commence a heavy U.S. marketing campaign and promote the gold ETF to brokers.

Many investors believe a U.S. gold EFT could positively impact the price of gold, which has already reached 16-year highs of $444/oz this week.

Barclays Global Investors has also filed with the SEC to launch the iShares COMEX Gold Trust.

It has taken the SEC 18 months to approve the first gold ETF. A gold ETF by Gold Bullion Securities was launched on the Australian Stock Exchange last year. Gold ETFs have also been listed in South Africa and England.

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