But, but, what does a “gold backed product” really mean?
For instance, QAU say in their marketing blurb that the fund is “Backed by physical gold bullion,”. How much gold bullion? 50%? 100%? How is it backed? Because, if you go to note 6 of their 2018 annual accounts there is no mention of gold bullion. They only refer to “Gold contracts”, which are defined in note 2 (d) (v) as:
“Gold Bullion ETF invests in gold bullion through a deferred purchase and sale contract. Investments in gold bullion are carried at fair value through profit and loss based on the gold bullion price as at 10.30am London time (being the time of the London AM (sic) gold fix).”
Note 7 makes it clear they only buy and sell gold contracts. No mention of gold bullion purchases.
And derivatives are an integral part of your investment through FOREX contracts, notes 8,9,10, and 11.
So my question before investing would be, how much gold is physically held in an allocated account in the name of the ETF?
There is no gold bullion in the balance sheet. They don’t buy or sell gold bullion. Where is the audited list of serial numbers of LGD bars in the ETF’s name? If you don’t own the gold, you don’t own the gold.
I don’t think many people have got the right idea of investing in physical gold. You don’t buy $$ of gold, you buy ounces. Of soft, yellow metal.
