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Jun 2003 - Perth Mint Gold

Perth Mint Gold (PMG) (ZAUWBA) – At Last, the Ability to Buy Gold on the ASX

  • On the 16 May 2003, the Gold Corporation (a statutory authority of the WA Government ) issued a new AAA rated tradeable gold product called PMGs (Perth Mint Gold Quoted Product) where 1 PMG = 1/100th of an ounce of gold, with the ASX Code : ZAUWBA.
  • Investors can buy on market through any stockbroker (with the settlement being made through CHESS, T + 3) at the same charges applicable to shares. Being 1/100th oz, the individual PMGs would currently trade at about A$5.40 each, which should encourage healthy trade as the product achieves market penetration.
  • Deutsche Bank has been appointed as market maker for PMGs to ensure that the trading value is close to the spot gold price (based on the US$/oz gold price and A$/US$ exchange rate). Gold Corporation can also support the market in PMGs.
  • In order to satisfy the ASX, the product is classified as a call warrant with a closing date of 6 May 2004. Theoretically that means that the original allowed issue of 100t of gold or 321.5m units (or 3.215moz) cannot be increased beyond that date, and remains at that number until 31 December 2013, when it is likely to be rolled into a similar product. If a trading volume of more than 100t of gold is required after 6 May 2004, then another series can be issued.
  • The PMGs are guaranteed by the Perth Mint. They can be converted into cash at a cost of $0.50/oz plus $100 (settlement T + 5). They can also be converted into gold that can either be stored at the Perth Mint or physically delivered in various specified forms with typical delivery charges.
  • Although there is risk due to the strength in the A$, an investment in PMGs is not subject to issues that can affect gold shares such as falling gold production, rising cash costs or lower grades than expected which has affected some shares in the past year, such as Kingsgate (KCN) down from A$3.79 to A$2.96 between 28 May and 2 Jun 2003 when A$ gold was little changed from A$554/oz to A$556/oz, or Gympie (GYM) down from $0.73 to $0.43 between 2 Jan and 5 Feb 2003 when A$ gold rose from A$610/oz to A$647/oz.
  • Written by: Keith Goode
  • Thursday, 19 June 2003

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