Canadian Mint launches new gold "ETR"

This was actually announced on Friday but only hit the papers today. The Royal Canadian Mint is proposing to sell a fraudulent product they call an "Exchange Traded Receipt" (ETR), each one of which represents a fixed amount of gold. The initial proposed price is $20 per unit, and the amount of gold represented by each receipt will be determined by the gold price on the Closing Date (not stated if this is the closing price, maximum price, London PM fix?).

The objective is to sell $250 million worth of units, through the usual culprits. The Closing Date is expected to be in late November.

You should note that this is not a good method for holding gold in the long term, as there is a management fee of 35 basis points per year, which is deducted daily from the gold represented by each receipt. So it's a little like buying a bag of gold with a very small hole--each day, a little will leak out.

According to the Mint's announcement, there will be a procedure for taking delivery of the gold represented by each certificate. No word yet on how onerous or time-consuming this procedure will be.

And if by chance the gold represented by your receipt goes missing at the Mint for whatever reason, there is this:

ETR holders will have no recourse to the Mint or the Government of Canada for any loss on their investment.

Of course if you never try to take delivery, you never have to find out if there is any gold backing this instrument.

Congrats to the Toronto Star for spicing up the otherwise bland coverage of this momentous achievement with the following quote from Dr. Moshe Milevsky, a professor at the Schulich School of Business:

“What I worry about is if people somehow think the government is somehow telling them gold is a good investment,” said Milevsky. 

 Oh no, we'd never want people to think that!