Why the VanEck Merk Gold ETF (OUNZ) is Winning Over New Yorkers
Gold ETFs: An Insider’s Perspective
While other exchange-traded gold products faced outflows for months, OUNZ – the VanEck Merk Gold ETF – bucked the trend, gathering more gold. Crafted in 2014 as a response to the market’s massive ETFs, OUNZ recently surpassed US$1 billion in holdings. Here’s a closer look at why OUNZ stands out in the crowded field.
Physical Gold’s Charm (And Risk)
The beauty of physical gold is its lack of counter-party risk. However, risk enters when you physically hold it. For instance, a gold coin can be lost or stolen. Small gold holdings might find a home under your pillow, but what about significant amounts? I cooked up OUNZ to solve this: it offers cost-effective gold holding with the option of requesting delivery at any time. Yes, I put my money where my mouth is; I own several thousand ounces through OUNZ.
Performance and Trend
Look at the growth in shares outstanding of U.S. exchange-traded gold products over $500 million from the past year. OUNZ, colored in blue, is topping the chart. During this period, physical gold buying grabbed headlines (yes, even Costco jumped in the game), yet exchange-traded products had a lukewarm reception, many experiencing outflows.
Key Differentiator: Delivery Option
This brings us to the pivotal difference between OUNZ and other ETFs: the ability to request gold delivery. This positions OUNZ within the realm of physical gold for many investors. Most OUNZ investors don’t actually take delivery, but they love having the option. This feature attracts long-term investors rather than short-term speculators. Some interesting highlights include:
- Real Deliveries: Year-to-date, 383 ounces of gold have been delivered through OUNZ.
- Scalable Process: We’ve patented a unique interface to convert large London bars into coins and smaller bars.
- Non-Taxable Delivery: Taking delivery of gold isn’t a taxable event as you already own it.
- Affordable Premiums: Delivery carries only the coin’s premium over spot gold, often cheaper than through a coin dealer.
Smart Pricing
A significant tweak last year eliminated a quirky industry practice: competitors value gold based on London’s afternoon prices. Instead, OUNZ uses the New York Stock Exchange’s closing price, working with Solactive to create the Solactive Gold Spot Index. This has kept OUNZ’s Net Asset Value premium or discount near zero over the past 12 months.
Simplifying Cost Structures
At Merk, we focus on ounces more than dollars. Management fees for OUNZ are paid in shares of OUNZ – meaning we get paid in gold, and no gold needs to be sold for expenses. OUNZ’s ordinary expenses are similarly managed, avoiding the sale of any gold.
Another misconception needs clearing up: what if demand for OUNZ spikes, but there’s no available gold at the vault? OUNZ shares are only issued once the custodian confirms gold delivery and allocation. If no gold is available, we won’t issue new shares. Unlike competitors, our primary objective isn’t tracking gold prices but allowing investors to invest in gold and take physical delivery if desired.
Final Thoughts
Physical gold offers a unique blend of security and stability. OUNZ enhances this by providing a flexible and cost-effective investment option that includes the potential for gold delivery. In the ever-changing market, OUNZ’s innovative approach ensures it remains a standout choice for gold investors.
For more info, feel free to check out Merk Gold.
Related Resources
- Current shares outstanding of U.S. exchange-traded gold products
- Gold Pricing Details
- Cost Effective Gold Delivery
Managing Editor: Your New York Gold Enthusiast