Loading ...BMO gold product takes aim at big ETF market, new investors
NEW YORK – Bank of Montreal has launched a new way for investors to buy physical gold, offering greater security than private storage while going head to head with the $60-billion exchange-traded fund industry.
The launch comes at a critical time for bullion, with investors in recent weeks making a tentative return to the market after a prolonged exodus as the oil rout and euro zone instability reignite gold’s appeal as a safe-haven investment.
The first of its kind in the US, the Canadian bank’s new gold deposit receipt program (GOLDR) allows investors to buy and sell shares that are backed by physical bullion stored in Canada and which track the price of spot gold.
Each share represents one ounce of gold, which on Tuesday was worth about $1 260. The bank said the program will issue $500-million worth of shares to start with.
The program will be similar to gold ETFs, which were created about ten years ago and have become a popular vehicle for retail and institutional investors who do not want to take physical delivery of bullion.
Unlike ETFs that trade at either a discount or premium to the spot gold market, GOLDRs will track the spot price. BMO will charge a one-time upfront fee of 2% and allows gold to be delivered in amounts as small as 1 oz, the bank said.