OUNZ ETF: Question and Answer
July 06, 2023
Read Time 7 MIN
For centuries, gold has served as a form of exchange, a safe haven investment (in times of financial market turmoil) as well as a hedge against severe inflation. As an investment, gold delivers the ability to enhance portfolio diversification, acts as store of value, and hedges against systemic risk. This blog intends to answer frequently asked questions about the VanEck Merk® Gold Trust (OUNZ), which allows investors to redeem their shares for physical gold.
- What is the VanEck Merk Gold Trust (OUNZ)?
- Who is Merk Investments LLC?
- When I own OUNZ, do I own gold?
- What type of gold does OUNZ hold?
- Can I take delivery of the gold I own through the OUNZ?
- What type of gold can I receive?
- Where and how can I have my gold delivered?
- When will I receive my gold?
- What is the Exchange Fee?
- Is there a Delivery Fee?
- What is the Processing Fee?
- How can investors buy VanEck ETFs?
What is the VanEck Merk Gold Trust (OUNZ)?
OUNZ seeks to provide investors with a convenient and cost-efficient way to buy and hold gold through an exchange traded product with the option to take physical delivery of gold. For the purpose of facilitating delivery, Merk Investments LLC has developed a proprietary process for the conversion of London Bars into gold coins and bars in denominations investors may desire. Another benefit of this approach is that taking delivery of gold is not a taxable event as investors merely take possession of what they already own: the gold.
Who is Merk Investments LLC?
Merk Investments LLC is the sponsor of OUNZ and arranged for the creation of the Trust and listing of shares of the Trust on the NYSE Arca. Merk interacts with the Trust’s service providers and will also facilitate the review of Delivery Applications and the delivery of physical gold to Delivery Applicants.
When I own OUNZ, do I own gold?
Yes. Each investor owns a pro-rata share of OUNZ, and as such holds pro-rata ownership of the Trust's gold holdings, corresponding to the number of shares held.
What type of gold does OUNZ hold?
OUNZ holds London Bars. The Trust holds its London Bars in allocated form with the Custodian. The physical gold is held in a segregated fashion in the name of the Trust, and is never commingled with other depositor funds or assets. The Trust has full title to the gold with the Custodian holding it on the Trust’s behalf. Each investor owns a pro-rata share of the Trust, and as such holds pro-rata ownership of the Trust assets, corresponding to the number of shares held. Trust holdings are identified in a weight list of bars published on the Trust’s website showing the unique bar number, gross weight, the assay or fineness of each bar and its fine weight. Credits or debits to the holding will be affected by physical movements of bars to or from the Trust’s physical holding. The Trust’s gold holdings are subject to periodic audits.
The Trust may further hold up to a maximum of 430 ounces of unallocated gold.
To facilitate the ability to exchange shares into physical gold for delivery, Merk may convert the Trust’s gold into gold of different specifications. All gold obtained by the Trust must be without numismatic value and have a minimum fineness (or purity) of 995 parts per 1,000 (99.5%). The only exception is that the Trust may also obtain American Gold Eagle Coins (with a minimum fineness of 91.67%) solely for delivery to a Delivery Applicant. While Delivery Applicants may always request London Bars, market conditions may cause Merk to limit other types of physical gold made available for delivery.
Can I take delivery of the gold I own through the OUNZ?
Yes, investors have the option to take delivery of physical gold in exchange for their shares.
What type of gold can I receive?
Investors may take delivery of the London Bars the Trust holds, and may also take delivery of 1-ounce coins and bars, as well as 10-ounce bars, such as:
|1 oz American Gold Eagle coins||91.67%|
|1 oz American Gold Buffalo coins||99.99%|
|1 oz Australian Gold Kangaroo coins||99.99%|
|1 oz Canadian Gold Maple Leaf coins||99.99%|
|1 oz or 10 oz Australian bars||99.99%|
The latest coin and bar availability can be found here.
Where and how can I have my gold delivered?
The Trust will ship physical gold fully insured to a Delivery Applicant by a conventional shipping carrier, such as the U.S. Postal Service, Federal Express, United Parcel Service or armored transportation service.
Delivery Applicants should be aware that the gold delivered is likely to represent a substantial U.S. dollar value:
- Shipments may be broken down into multiple smaller amounts and possibly shipped on different days to meet the insurance requirements of the shipping carrier. A Delivery Applicant can utilize a shipping carrier only if insurance and delivery destination requirements can be met. A conventional shipping carrier may deliver gold to residential addresses.
- Armored Transportation Service will only deliver to certain trusted locations, and please note that an Armored Transportation Service does not deliver to residential addresses. A Delivery Applicant can utilize an armored truck service only if the Delivery Applicant and the Armored Transportation Service agree on an acceptable delivery destination. London Bars will only be transported using Armored Transportation Service.
Delivery Applicants should contact Merk Investments LLC to discuss delivery method and location.
A Delivery Application may be declined if no delivery method and location is agreed upon.
When will I receive my gold?
For coins and bars other than London Bars, Delivery Applications can be processed fastest when investors have their gold delivered to the address stated on their brokerage account. This way, gold coins and bars may be delivered with UPS next-day delivery service to your home address (this does not include London Bars). For example:
- After shares are accepted by the Trustee, Merk will be notified of the successful share submission later that business day. Typically the next day, Merk will engage in an over the counter transaction with the precious metals dealer to facilitate an exchange of the Trust's gold into coins and bars specified in the Delivery Application. The completion of this exchange typically takes 2 business days. This means gold coins and bars (other than London Bars) might be handed over to UPS for next day delivery on the third business day after a share submission, allowing the Delivery Applicant to receive their gold on the fourth business day after share submission.
- Note that this timeline may be faster or slower, in part due to the availability of the Delivery Applicant to receive packages.
Investors requesting London Bars need to be aware that London Bars are only delivered with an Armored Transportation Service that does not deliver to residential addresses. Armored Transportation Services only deliver to trusted addresses. Delivery Applications can be processed faster when the Delivery Address is a familiar address, such as a precious metals depository. For new destinations, a security survey first has to be conducted to ensure the safety of the crew and vehicle. The legwork to agree on a suitable delivery location takes place before Merk pre-approves a Delivery Application. A Delivery Application may be declined if no delivery method and location is agreed upon.
What is the Exchange Fee?
The Exchange Fee covers the cost of exchanging OUNZ shares into gold bars in the form of London Bars, which the Trust holds in the vault. The Exchange Fee also covers the cost of converting London Bars into the gold coins or smaller gold bars that investors may prefer for delivery. The Exchange Fee for gold coins and bars, outside of London Bars, reflects the premium such coins and bars are trading at relative to the spot price of gold.
All fees are subject to change upon notice; we may waive or reduce the Exchange Fees from time to time.
Is there a Delivery Fee?
No Delivery Fee is charged for the delivery of physical gold to destinations in the lower 48 States.
There may be a Delivery Fee to Alaska and Hawaii as well as to countries outside of the U.S. This fee covers the cost of preparing and transporting physical gold from the Custodian or the precious metals dealer to the location specified by a Delivery Applicant in its Delivery Application.
What is the Processing Fee?
The Processing Fee consists of the Exchange Fee and the Delivery Fee (if applicable). The Processing Fees must be wired by the Delivery Applicant at the time the Delivery Application is submitted; the fee is fully reimbursable until the Delivery Applicant submits his or her shares to the Trustee.
How can investors buy VanEck ETFs?
OUNZ | VanEck Merk Gold Trust Prospectus
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
The material must be preceded or accompanied by a prospectus. Before investing you should carefully consider the VanEck Merk Gold Trust's (the “Trust") investment objectives, risks, charges and expenses. Please read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal. The Trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for the purposes of the Commodity Exchange Act. Shares of the Trust are not subject to the same regulatory requirements as mutual funds. Because shares of the Trust are intended to reflect the price of the gold held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting gold prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns.
The request for redemption of shares for gold is subject to a number of risks including but not limited to the potential for the price of gold to decline during the time between the submission of the request and delivery. Delivery may take a considerable amount of time depending on your location.
Commodities and commodity-index linked securities may be affected by changes in overall market movements and other factors such as weather, disease, embargoes, or political and regulatory developments, as well as trading activity of speculators and arbitrageurs in the underlying commodities.
Trust shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of Trust shares relates directly to the value of the gold held by the Trust (less its expenses), and fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the gold represented by them. The Trust does not generate any income, and as the Trust regularly issues shares to pay for the Sponsor’s ongoing expenses, the amount of gold represented by each Share will decline over time. Investing involves risk, and you could lose money on an investment in the Trust. For a more complete discussion of the risk factors relative to the Trust, carefully read the prospectus.
Diversification does not assure a profit or protect against loss.
The sponsor of the Trust is Merk Investments LLC (the “Sponsor”). VanEck provides marketing services to the Trust.
© 2023 Merk Investments LLC. © 2023 VanEck. All trademarks, service marks or registered trademarks are the property of their respective owners.
November 13, 2023
October 10, 2023
November 13, 2023
Gold had a strong October, trading above $2,000 per ounce. While gold stocks continued to lag gold, we believe a possible sector re-rating may reverse course and provide support to gold companies.
October 10, 2023
Gold succumbed to the pressures of rising yields and a strong U.S. dollar in September, but is positioned to benefit when market dislocation reverses.
September 30, 2023
VanEck has provided investors access to gold, one of the most vital metals in the world, for over 50 years with both actively and passively managed solutions.
September 30, 2023
The performance of gold and gold stocks in the current chaotic environment reaffirmed our belief in gold’s role as a potential safe haven investment and legitimate form of portfolio insurance.