A golden ETF with pleasant sustainability surprises
When he debuted seven and a half years ago, the VanEck Merk Gold Trust (OUNZ) led the way among physically backed gold exchange-traded funds.
OUNZ became the first US-listed ETF to offer actual delivery of physical bullion when an investor sells shares of the fund. The strategy resonates with some golden bugs, as highlighted by OUNZ’s $ 570.7 million in assets under management.
OUNZ “seeks to provide investors with a convenient and economical way to buy and hold gold through an exchange traded product with the ability to take physical delivery of the gold,” according to VanEck.
These days, OUNZ is proving its pioneering spirit again, but many investors may not be sure why. OUNZ is emerging as a gold ETF with socially responsible and sustainable characteristics at a time when these styles of investing are sweeping the equity fund landscape.
“The gold bars held by OUNZ are what are called ‘London Bars’. These are the major gold bullion institutions and central banks use to trade and store gold. London Bars are subject to the rules established by the London Bullion Market Association (LBMA), ”says Axel Merk of Merk Investments. “In 2012, the LBMA presented its Responsible procurement program. The program “follows the five-step due diligence framework defined in the OECD Guide and requires Good delivery refiners to demonstrate their efforts to fight money laundering, terrorist financing and human rights violations, and to respect the environment on a global scale.
The way in which various products are purchased has become increasingly important to consumers in recent years. For example, it’s common for Starbucks and other coffee chains to point out that their beans come from fair trade pacts. Likewise, some jewelers make a point of telling customers that they do not sell “blood diamonds”.
These are just two examples, but they are proof that consumers are applying sustainability to their daily shopping habits. This has a significant impact on the investment landscape. In fact, OUNZ is all the more relevant given that gold, like diamonds, is used to being mined in some countries with questionable human rights records. However, miners have long strived to improve their sustainability track record, and OUNZ is the only gold ETF focusing on this movement.
“Long before sustainability was a consideration for many investors, many artisanal miners were responsible for how they treat the environment and support the communities in which they operate,” Merk concludes. “The responsible procurement program helps formalize and audit best practices in mining and money laundering. By holding responsibly sourced gold in OUNZ, we hope sustainability-conscious investors will consider whether gold can help diversify their portfolios. “
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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not come to fruition. The information on this site should not be used or interpreted as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.