Can anyone tell me why these trade at a discount to spot. I'm sure there must be an obvious answer but it is slipping by me. Is it just because there is a 0.49% managment charge? malachii
Metal entitlement is 0.9886661oz - it's not a full ounce. Multiply spot by 0.9886661 and you fall roughly within the current ask/bid range on the ASX. I think the management fee is collected by reducing the backing of a single security, not sure if this is an annual event or more frequently. I'm pretty sure that with the Perth Mint PMGOLD security for gold, they actually reduce the number of securities in your holding, so that they are constantly backed by the same amount of metal, not a diminishing amount.
yeah thats their fee for holding the physical, you buy at a discount but also sell at the same. I have some investment with this.
Explanation of etpmag http://www.etfsecurities.com/msl/etfs_physical_silver_au.asp#key there are also ETFs for gold, platinum and palladium & there is an ETF for a basket of precious metals. ETPMAG info on the ASX website http://www.asx.com.au/asx/markets/priceLookup.do?by=asxCodes&asxCodes=etpmag
GOLD = Au Gold (not considered a warrent but a true ETF) ETPMAG = Ag Silver (warrent) ETPMPT = Platinum (Warrent) ETPMPD = Palladium (warrent) ETPMPM = PM basket (% of all, warrent) Some brokers (its true for commsec at least) need to sign a warrent agreement before they can trade warrents
Just bought 100 ounces of ETPMAG $32, i didnt think it would fall to that level, next support level is about $28, we'll see when we wake up tomorrow
can you just explain what costs or fees were associated with that purchase of $100 oz ? and what costs will be incurred if lets say silver goes to $40 /oz and you sell the 100 oz ? can you elect to take physical delivery and if yes at what cost ? thanks
Thucy, It's just like buying a stock - use an online broker and pay their normal commissions. It's not something you'd do to take delivery of physical. It's backed by ~1000oz bars in global vaults. I don't think they hold anything in Australia. 100 warrants of ETPMAG isn't 100oz either - it's only 98.87oz. Essentially it's a paper instrument to get exposure to spot prices. Disclosure - I am not a holder of ETPMAG.
thanks GP, i am aware its like buying stocks there are commissions and such costs to pay. but how much would that be on a purchase of 100 oz via etpmag ? and was aware of 0.9887 oz backing per 1 oz etpmag warrant. thanks
100x ETPMAG is only about $3290 - so $15 to buy, $15 to sell at your favourite online broker. There's a spread, but it generally seems to be under 20c - it's 12c at the moment. So with the current spread of 32.820 / 32.940, right now you could buy 100 ETPMAG (we'll pretend it's 100oz, not 98.87oz) for $3294 + $15 brokerage, and sell for $3282, minus $15 brokerage. So your spread on 100x is $3309-$3267, or $42 - basically just over 42c/oz spread. Physical has a spread of around $1.65/oz for 100oz bars.
You can also take delivery instead of cashing out, via agreement with the perth mint (as far as I understand) There's probably fees and such related to it
Thanks - I tried checking their website earlier today for delivery options, but it was throwing a whole bunch of web server errors.
I believe the best option available (researched it aug last year so memory might be playing tricks) but moving you ETPMAG holding from the communal allocated holding to a private allocated holding. http://www.etfsecurities.com/au/welcome.asp just for anyone who doesnt know
This is the FAQ from the sight (18 is the physical delivery, and I did have to sign a warrent agreement so thats bullcrap! when i tried to buy at $23 in Nov last year they said i didnt have a warrent agreement - i was mightily pissed off) 1. Who is ETF Securities (ETFS)? ETF Securities is the pioneer and leader in Exchange Traded Commodities (ETCs). The management of ETF Securities created the world's first ETC in 2003 - Gold Bullion Securities in Australia and London which now has over US$3 billion in assets. In 2005, ETF Securities created the world's first oil ETC and then in 2006 ETF Securities created the world's first ETC platform on the London Stock Exchange, making available 19 commodities and 10 indices. In 2007, ETF Securities created the world's first physically backed precious metals ETC platform, making available platinum and palladium for the first time ever. ETF Securities has most recently launched the largest platform of thematic sector ETFs in Europe providing exposure to European firsts such as Coal, Steel, Shipping and Nuclear Power. Now investors can trade all the world's major commodities on the same exchange and in the same time zone. 2. What are Exchange Traded Commodities (ETCs)? ETCs are simple and transparent open-ended securities which trade on regulated exchanges. ETCs enable investors to gain exposure to commodities without trading futures or taking physical delivery. ETFS-branded ETCs are secured, undated, zero coupon notes that are designed to accurately track the underlying commodity index or individual commodity. 3. Are ETCs very similar to Exchange Traded Funds (ETFs)? ETCs are very similar to ETFs because they are both open-ended, continuously traded and have multiple market makers. The main difference is that ETCs use a secured, undated, zero coupon note structure, whereas ETFs typically use a fund structure. 4. How do I buy and sell an ETC? Investors can buy and sell ETCs throughout the trading day on regulated stock exchanges through ordinary brokerage accounts. 5. Who is the Issuer? ETFS Australian Metal Securities Limited is the issuer of 5 physically backed precious metal ETCs. The assets of each Issuer and class of security are ring-fenced for investor protection. The Issuers are administered by ETFS Management Company (Jersey) Limited. 6. How are ETCs priced and where is the information published? ETFS Metal Securities are priced directly off the spot price of the four relevant precious metals. Detailed pricing is available for all securities on the ETF Securities website. 7. Do ETCs track the underlying commodity price? ETCs which are physically backed are priced directly off the metal spot price and therefore returns are 100% correlated to the underlying price. These ETCs track the precious metals price less fees. 8. Do ETCs make interest payments? ETFS (physical) Metal Securities pay no interest or dividends. 9. How can you guarantee the tracking error remains minimal? Similar to ETFs, ETCs are open-ended securities, and therefore Authorised Participants (who are generally investment banks with commodities expertise) can create or redeem ETCs at their underlying value or NAV. 10. How is liquidity provided? ETCs are open-ended, therefore new ETCs can be created by Authorised Participants according to demand. Therefore, the liquidity of ETCs reflects the liquidity of the relevant underlying commodity market(s). 11. What would happen if ETF Securities were to go bankrupt? If ETF Securities were to go bankrupt, this would not affect the value of the ETCs. Each ETC is issued by a Special Purpose Vehicle whose assets are ring-fenced for investor's safety and the activities for each Issuer are monitored by an independent Trustee. ETF Securities does not hold any investor money at any time. 12. What is the credit risk of the different ETCs? For ETCs issued by ETFS Metal Securities Australia Ltd. - all bullion is held in allocated London good Delivery bars by the custodian, HSBC. In the event HSBC were to go bankrupt, the Issuer (and Trustee) would take control of the metal. In the event that ETF Securities were to go bankrupt then the Trustee and an Administrator would take control of the allocated metal which should have no effect on the value of the ETCs since the Issuer is ring-fenced from ETF Securities. 13. Are there any other costs besides Management Fees? No, although your broker or financial advisor will also charge you normal transactions costs (commissions) associated with the purchase or sale of ETCs 14. My broker indicated she/he cannot buy the product because it is in USD. What can I do? Your broker or financial advisor should be able to buy or sell ETCs as they are listed on regulated exchanges. Most brokers should be able to convert a USD amount to another currency. If not, please send us an email or contact ETF Securities directly, and we will put you in touch with a broker that can execute your order. 15. Can investors lose money? The price of ETCs can go up or down, however investors cannot lose more than the amount of the initial investment. 16. What is the difference between ETCs and certificates or turbos? ETCs issued by ETFS Metal Securities Australia Ltd. are open-ended securities backed by physical precious metal held with the Custodian, and multiple market makers ensure tight bid-offer spreads for trading on regulated exchanges. Certificates or turbos are notes created, priced and traded by issuing banks - there are no creations/redemptions on demand and they are generally less liquid and bear the issuer credit risk. 17. Who regulates ETF Securities and ETCs The issuer, ETFS Metal Securities Limited is incorporated in Australia. The ETCs themselves are issued pursuant to a prospectus approved by the Australian Securities and Investments Commission ("ASIC"), which acts as the home regulator of such. ETF Securities Limited is incorporated in Jersey and is regulated by the Jersey Financial Services Authority. 18. Can I take physical delivery of my bullion? For the physically backed ETCs you can arrange for physical delivery of the bullion. 22. Do Australian investors need to sign a Warrant Agreement form to trade the ASX listed Exchange Traded Commodities? No, they do not need to sign a Warrant Agreement form. All ETCs trading on the ASX via the AQUA platform trade and settle just like regular listed securities, which do not require a form to be signed. Whereas if investors would like to trade Warrants via AQUA, they will need to sign the relevant agreement form to do so.
