iShares Gold Bullion Fund (CGL)

The iShares Gold Bullion Fund seeks to replicate the performance of the price of gold bullion, less its expenses and fees. This ETF purchases and holds physical gold bullion in accordance with its investment objective, strategy, policies and restrictions. It is also currency hedged with forward contracts of the hedged common units, cash and permitted gold certificates.

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Launched in May 2009, CGL offers Canadian investors the closest substitute to a physical gold bullion investment. The ETF does not speculate on short-term price changes. Paying a management fee of 0.50%, investors are able to bypass the efforts associated with handling, storing and insuring their own gold bullion. CGL is currency hedged against the US Dollar (into CAD).
For those seeking US dollar exposure, CGL is available in a non-hedged version: CGL.C. CGL’s physical gold bullion holdings are stored in the vault of a division of the Bank of Nova Scotia, a Canadian Schedule I Chartered Bank. While QE “Infinity” and general paper currency “de-basing” should bolster the case for Gold, the reality has been that with risk in retreat and markets rising, the appetite for bullion seems to have taken a backseat to hopes of further market improvement. Following a spike through $1900 in September 2011, the price of gold had generally traded in a $1600-$1800 band, until April 2013, when the price plunged below $1400, following a series of declines of significant magnitude. More recently, Bullion has broken down further (USD 1,200-1,250), against the prospect of FED “tapering” and a stronger USD, with ETF flows playing – negatively – into the story.

Seasonal strength is ahead shortly, but beyond this, catalysts for a rebound in bullion are hard to come by…

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