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Ted Butler: Signed, sealed, delivered?
By Alison Guerriere Ciaccio
Dow Jones Newswires
Friday, March 31, 2006
http://sg.biz.yahoo.com/060330/15/3zr0c.html
NEW YORK -- The World Gold Trust Services has its sights set on Asia
and the Middle East for the next roll-out of its highly successful
gold exchange-traded fund after gaining large market share in the
U.S. since the streetTRACKS Gold Shares ETF was launched in November
2004.
During a recent interview here, George Milling-Stanley, director of
corporate communications of World Gold Trust Services -- sponsor of
the ETF -- and manager of investment at the World Gold Council, told
Dow Jones Newswires that his mission is to increase the consumption
level of gold by way of ETFs, which currently account for less than
10% of annual gold consumption.
"We want to grow the market," said Milling-Stanley citing his
biggest challenge for the ETF.
In growing that market, Milling-Stanley said he is reaching out to
longer-term institutional investors as well as looking to other
countries to launch the gold ETF.
"We would not be surprised to see two more filings (for the launch
of a gold ETF in other countries) by the end of the year," Milling-
Stanley said, referring to the gold ETF traded on the New York Stock
Exchange under the symbol GLD.
Since its launch in 2004, the fund has seen about $7.75 billion
invested into it worldwide. The ETF is currently traded at exchanges
in Australia, London, Johannesburg and the U.S.
"Our goal is to have 24/7 coverage. Right now GLD trades about 16
hours a day," said Milling-Stanley. "We would like to see a product
in Asia."
The idea for the gold ETF came from the World Gold Council's
contention that investment demand needed to be increased for gold
due to several barriers of entry for interested investors into the
market.
J. Stuart Thomas, the managing director of World Gold Trust
Services, told Dow Jones that due to the barriers of entry,
investors were relegated to investing in gold producers or finding a
dealer.
"The barriers were costly and investors were not seriously
considering gold because of that," said Thomas.
While hoping to roll out the ETF in the U.S. first, dealings with
the U.S. Securities and Exchange Commission took longer than
expected so other countries moved in.
"We ended up rolling it out in Australia first then the London Stock
Exchange and then on the New York Stock Exchange," said Thomas.
Looking ahead, Thomas said he hopes to see a roll-out in Hong Kong
and even Dubai and areas of the Middle East, which he said appear to
be "natural markets" given the demand in those regions.
While there was little or no opposition to the gold ETF, a similar
product aimed at the silver market proposed by Barclays Global
Investors -- which has its own gold ETF -- is facing criticism
mainly from Silver Association groups.
Thomas and Milling-Stanley said the stark contrast between gold and
silver is the above ground stocks that are available in the market.
"Pretty much every bit of gold that has been mined is still in
existence today and are in a liquid form and can be mobilized if
necessary," said Thomas.
For silver, Milling-Stanley said, most of the above-ground stocks
are in old photographic negatives and X-ray negatives that will most
likely never be recovered.
"(That silver) may still exist but it doesn't exist in liquid form.
And that's been the principle objection from the Silver Users
Association and other people is that the market is not sufficiently
deep and liquid," said Milling-Stanley.
Currently the SEC has approved the first part of a silver ETF that
is planned to be traded on the American Stock Exchange. The final
process of the approval is underway although no timetable for the
possible launch has been set.
While the silver ETF is in the works, Thomas and Milling-Stanley
said they have no fear of competition for the gold ETF as far as
silver is concerned.
"We are not frightened of any competition and there is a unique case
for gold in investment portfolios and it is the lack of correction
with all main stream asset classes and the economy" that makes it
attractive, Milling-Stanley said.
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----------------------------------------------------
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