Interactive Investor

ii comments on listing of the Royal Mint Physical Gold Securities ETC on LSE

17th February 2020 15:06

Jemma Jackson from interactive investor


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Head of Funds Dzmitry Lipski shares his thoughts on the exchange traded commodity.

Commenting on today’s announcement that the Royal Mint will list a gold backed exchange traded commodity (The Royal Mint Physical Gold Securities) on the London Stock Exchange this week, Dzmitry Lipski, Head of Funds Research, interactive investor, says: “The fact that the Royal Mint, the 1,100-year-old government owned coin maker, is launching its maiden gold ETC is a big deal and underlines the growing popularity of the asset.

“Investors might feel more secure with the knowledge that they would be putting their money in what is a fairly niche financial product backed by one of the UK’s most trusted and long-standing organisations. But nevertheless, bear in mind that gold can have big short-term swings in value and is sensitive to anything from currency fluctuations, through to the Indian wedding season – and not even Royal Mint can insulate investors from that.

“Gold is widely viewed as a port in a storm, with many investors dedicating a small portion of their portfolio to the precious metal to hedge against uncertainty in the world economy. There are a number of ways to own gold. You could own physical gold, but you would need to factor in the cost of storage, insurance and transaction fees. Specialist gold mutual funds are another option but the cost of mining gold, for example, can affect performance.

“One of the easiest, cheapest and more liquid ways to invest in gold is through an exchange traded commodity (ETC) that tracks the price of the asset – which means they can follow the price of gold down as well as up. We think ETCs are the best mechanisms to gain exposure to the precious metal and one such product, the iShares Physical Gold ETC, is on our Super 60 rated list and is competitively priced with ongoing costs at 0.19%.

“The Royal Mint Physical Gold Securities ETC is backed by physical gold which is held in The Royal Mint’s purpose-built vault - unlike in a synthetic gold ETF which are backed by collateral such as Government Bonds. With a total expense ratio just 0.22%, the ETC offers a low-cost exposure to gold.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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