Market Overview

With Gold Sliding, A New ETF Debuts

With Gold Sliding, A New ETF Debuts

Gold prices and the related exchange traded funds are in a tailspin. Over the past month, the SPDR Gold Shares (NYSE: GLD), the world's largest gold ETF, is down almost 4 percent.

That is not preventing some issuers from testing the waters with new gold ETFs. On Wednesday, the Perth Mint Physical Gold ETF (NYSE: AAAU) debuted.

What Happened

The Perth Mint is the largest precious metals refiner in Australia. With the new AAAU, 100 shares of that ETF will be the equivalent of owning 1 ounce of physical gold. The government of Western Australia backs the physical gold investment in AAAU.

“The Perth Mint’s new ETF will be backed by physical gold and will give investors the option to take physical delivery from its gold products,” reports Reuters.

Why It's Important

Some ETF issuers have been launching new gold funds with lower fees in an effort to attract more attention from investors. For example, the SPDR Gold MiniShares Trust (NYSE: GLDM) debuted in late June with an annual expense ratio of 0.18 percent, or $18 on a $10,000 investment.

At the time, that made GLDM the least expensive gold ETF in the U.S. Data suggest there is enthusiasm for cost-effective gold ETFs, as highlighted by GLDM's $111.29 million in assets under management, a solid effort for an ETF that is less than two months old.

The new AAAU also has an annual fee of 0.18 percent, but the fund's expenses are “charged in ounces at the time of production rather than in dollars after the fee is converted,” according to Reuters.

What's Next

Perth Mint operates the only government-backed investment and precious metals storage offering in the world. The enterprise said it is mulling other ETFs, but declined to elaborate on details for those products in the Reuters article.

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