Industry Updates

Is it too late to launch a gold ETF? HANetf says no

George Geddes

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The Royal Mint has partnered with white label platform HANetf to release a gold-backed ETF in the UK, Italy and Germany. Set to launch in Q1 2020, the gold ETF will be the first of its kind to be launched by a Sovereign Mint in Europe.

HANetf’s co-founders Hector McNeil and Nik Bienkowski offer plenty of experience having been involved with the launch of the world’s first gold-backed ETF while they worked together at ETF Securities.

The physical gold allocated to the ETF will be stored in the Royal Mint’s vault located in Cardiff, one of the UK’s most secure sites and guarded 24/7, according to the safe house.

While there are already a significantly large number of gold ETFs available on the market, Hector McNeil, who spoke with ETF Stream, is confident there will be demand still for the new ETF.

It enables investors to gain exposure to the commodity while diversifying their vault risk as the underlying gold for other ETFs is typically stored in banks such as HSBC.

Gold has been a popular haven for investors in 2019 amid concerns regarding Brexit and the trade war between the US and China. As a result, gold ETFs have received three consecutive months of positive net flows and Australia's GOLD has surpassed the $1bn milestone.

McNeil is not worried the demand for gold will fall in the run up to the launch of the ETF as “investors usually allocate around 3-10% of their portfolios to gold,” he said. He faced a similar problem when launching ETF Securities' gold ETF in the US.

"When ETF Securities entered a busy US market with the gold ETF, we managed to differentiate ourselves from the rest," he said.

The price of gold in 2003 when ETF Securities launched its gold-backed ETFs was $250/oz, according to McNeil. WisdomTree forecasts the commodity's value to reach $1,550 by Q2 2020.

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