This write up of Gold Bullion Securities Limited explains who Gold Bullion Securities Limited are and the gold product they deal in. It is well worth reading before you make any decisions about investment from the information on their website www.goldbullion.com.au.
It is always a good idea to do some due diligence before dealing with any gold dealer or dealer in securities, and find out as much about them as possible.
Who are Gold Bullion Securities Limited
Gold Bullion Securities Limited is the issuer of Gold Bullion Securities (Ticker GBS) on the Australian Stock Exchange. The company is two thirds owned by the World Gold Council and one third by IRL Holdings Ltd. IRL (Holdings) Limited are an Offshore Incorporation Limited in ROAD TOWN, Tortola VIRGIN ISLANDS. IRL means Investor Resources Limited and is the registrant of the Gold Bullion Securities with Gold Bullion Securities Director Graham Tuckwell listed as the registrant contact. The World Gold Council (WGC), is a commercially-driven marketing organisation funded by the world’s leading gold mining companies. It is a global advocate for gold and aims to promote the demand for gold in all its forms through marketing activities in major international markets. For further information visit www.gold.org. The directors of Gold Bullion Securities Limited are, as mentioned, Graham Tuckwell, as well as Dr Vince FitzGerald and Simon Village. The official address is the Share Registry, Link Market Services Limited, Level 12, 680 George Street, Sydney, NSW 2000, Australia. The website is recorded in the wayback machine as first being registered in early 2003.
What Does Gold Bullion Securities Limited Do
Gold Bullion Securities Limited is designed to offer Australian investors easy access to the gold market in Gold Bullion Securities traded on the Australian Stock Exchange under the symbol GOLD, and becoming beneficial owners of the gold backing each share. This securitisation of gold bullion overcomes a number of issues that have proved to be barriers to accessing gold’s unique qualities. It is meant for Australian and certain exempt investors* only.
Gold Bullion Securities (GBS) can be bought through most regulated broker dealers and market makers. A list of these can be found on the website.
Also available is a gold bar count as conducted by the Inspectorate International Limited for Gold Bullion Securities Australia.
How Does It Work
Investors can now able to purchase gold backed products through traditional brokerage accounts. This allows gold to be mixed with traditional asset classes such as stocks and bonds in an investment portfolio. The underlying liquidity will be determined by the 24 hour global Over-the-Counter (OTC) market gold market. The Gold Bullion Security (GBS) is an exchange traded security (share or note) of nominal value which carries with it an entitlement to approximately 1/10th of one fine troy ounce of gold bullion. For each GBS on issue there is a corresponding amount of gold held in trust.
The exact structure of GBS to which the gold is attached may vary between markets of course depending on the structure of the market, tax and specific security regulations. In Australia, for example the gold is attached to a redeemable preference share, whereas in the UK, the gold is attached to a Note instead.
The securities are backed by 400 ounce London good delivery gold bars. The Net Asset Value is calculated daily, and posted on the web site under Financial Information. The gold bars themselves, can be seen on the Gold Bar Holdings page.
Premiums/Discounts Should be Limited – The ongoing ability of Market Makers to create and redeem securities (by exchanging gold for GBS and vice versa) should limit potential premiums and discounts Low Counter-party Risk. The Trust’s gold is held in the form of individually identified bars in an allocated account with a Custodian which holds the gold bars on trust for investors. The Trustee may not trade, lease or lend the gold bars.
Storage is covered by the Custodian, HSBC or subcustodian while the gold is insured under HSBC Group’s insurance policy. These expenses are covered by the monthly fee.
Investors are always advised to read the prospectus, which can be downloaded from the www.goldbullion.com.au website in consultation with their financial advisor before making any decisions to buy or sell any GBS.
All gold bullion held at the Custodian Bank for GBS investors on trust, is held in the form of Allocated Gold.
All the Allocated Accounts are held by the Custodian or subcustodian in the trustee’s name and consist of uniquely identifiable bars of gold "allocated" to the trustee and beneficially belonging to the investor. The gold held in the account is also physically segregated from other metal held in the vault. Metal in an allocated account does not form part of the Custodian’s assets. Allocated gold is not lent out and does not involve any derivatives. It is not used for any other purpose in fact than as gold held in trust on behalf of the investor.
All allocated gold is kept in the form of Allocated London Good Delivery bars (c. 400oz). The Custodian bank, the HSBC, holds the gold in its vault, or in vaults of its sub-custodians (sub-custodians might be banks which the HSBC uses to store gold and other precious metals). The details of each gold bar in the Trust is regularly updated on the web-site www.goldbullion.com.au
Most gold traded in the London market, however, is traded and settled in an unallocated form. Gold held in this form does not confer on the investor any interest in the underlying gold and the investor only ranks as an unsecured creditor. Unallocated gold may be lent out to third parties. It is always advisable to have allocated gold and not unallocated gold for this reason.
How to Buy and Sell GOLD
Buying and selling Gold this way is pretty simple. There is no minimum or maximum transaction size, but keep in mind the brokerage fees when buying and selling. This can affect the minimum transaction size as, for a broker, it is basically the same amount of work involved regardless of the size of the transaction.
Buying is generally done through registered stockbrokers and dealers. Securities houses and other market professionals, approved by Gold Bullion Securities Limited, can create new GOLD by depositing gold in the Trust
Basically there are two ways to buy GOLD. Buy GBS on the ASX via normal broking channels (on the secondary market). GBS trades like any other ASX-listed security or through a Market Maker. This is only available to institutional investors, who should consult the Prospectus for details.
Selling GOLD is done through registered brokers and dealers also. The same rules apply when it comes to brokers fees of course. All GOLD holders are entitled to redeem for cash (through the London AM fix) and securities houses and banks which trade in OTC gold and have access to a local London bullion account may redeem for gold. You can, then, sell GBS on the ASX via normal broking channels, or to a Market Maker. This is only available to institutional investors. However you can also redeem GBS by completing a Redemption Form. This method of sale is available to anyone. Keep in mind that a flat fee of A$1,000 is charged for a redemption so you would only want to be redeeming a reasonable quantity.
Costs and Fees
There is a management fee of 0.40% p.a. accrued daily and debited in gold against Trust assets monthly and brokerage charges are likely to apply on ASX trades in GOLD
Creation and redemption Can be made by institutions holding an Australian Financial Services Licence. The minimum creation in this case is A$500,000. Redemptions are accepted for part or whole of Gold Bullion Securities held. Other investors can buy and sell Gold Bullion Securities on the Australian Stock Exchange
Flat fees of A$750 per creation and as previously mentioned, A$1,000 per redemption. It should be noted, however, that these fees are only applicable to purchases and sales effected via creations and redemptions. They do not apply when trading on the ASX.
Last Words on Gold Bullion Securities Limited
If you have any issues on Gold Bullion Securities Limited, you should contact them through their contacts page. Anything you feel we should know about Gold Bullion Securities Limited or you think may be of interest to us, please go to the goldprice.org feedback page and feel free to leave your feedback on the quality of service and products including any Gold www.goldbullion.com.au online complaints and special attention or service given by www.goldbullion.com.au.
*Exempt investors means investors to which offers of securities are permitted to be made (in the place where the investor is located) without the need for a registered offer document such as a prospectus (for example institutional investors and holders of financial services licences).