MineWeb commentary on delay in World Gold Council''s bullion fund

Gold bullion fund to list on London Stock Exchange

By Kevin Morrison
Financial Times
August 17, 2003

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The World Gold Council is expected to file plans for its
proposed listing of an investment fund called Gold Bullion
PLC on the London Stock Exchange as early as this week.

The fund will allow investors to buy a direct interest in
bullion bars without having to worry about taking delivery,
storing, insuring, or transporting them. The gold will be
stored in the vaults of HSBC in London.

If the listing goes ahead, shares in Gold Bullion could be
trading in London next month, making it the first of many
gold-backed exchange-traded funds the council plans to
list on key stock exchanges around the world.

The council had initially hoped to list another gold-backed
exchange-traded fund called Equity Gold Trust on the
New York stock exchange before launches on other
exchanges. But the U.S. plans have stalled since the
council's May filing with the Securities and Exchange
Commission because of regulatory and legal issues.

It is understood the council is involved in a legal tussle
with the Bank of New York, which the council had
originally appointed to work on the listing of Equity Gold
Trust. Neither the council or the Bank of New York would
comment.

It is understood the council is forming a management
company, Gold Bullion Holdings, to run the London fund.
The council will hold two thirds of Gold Bullion Holdings
and one third will be owned by Investor Resources, a
company owned by Graham Tuckwell, executive chairman
of Gold Bullion Limited, an Australian-listed gold-backed
fund.

Gold Bullion Holdings will also become the management
company for the proposed gold-backed funds to be listed
on exchanges including Tokyo, Johannesburg, Toronto,
Hong Kong, and Singapore over the next 12 to 18 months.

The involvement of Mr. Tuckwell follows more than 12
months of work between the council and the Australian
businessman. The council helped launch Gold Bullion
Ltd.'s listing on the Australian Stock Exchange, and
Mr. Tuckwell has worked extensively on the council's
gold-backed fund plans.

Mr. Tuckwell and Simon Village, the council's managing
director for investment services, will become joint
managing directors of Gold Bullion Holdings.

The council hopes the fund will increase demand for gold
by making it easier and cheaper for people to invest in it.
The metal's price has rallied in the last two years, partly
because of its appeal as a safe haven investment in times
of geopolitical uncertainty.

Melbourne-based Gold Bullion Ltd. became the world's
first listed open gold-backed fund when it went public at
the end of March. Since then it has attracted sales of about
123,000 ounces.

Each Gold Bullion PLC trust share is expected to represent
one-tenth of an ounce of gold, with the intention that each
share should track the price of gold. Based on current gold
prices each share should trade at about 22 pounds ($36),
based on a gold price of $360, with the cost of the
transaction at 0.01 per cent.

Investors currently wanting to buy bullion face transaction
fees of 3 to 7 percent, whereas buying shares in the trust
will be about the same as buying shares in a company.