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Friday, March 19, 2010

A new way to invest in gold: the Claymore Gold Bullion EFT (CGL)

This Friday, we invested in 200 stocks of Claymore Gold Bullion EFT (CGL). Curious about Claymore Gold Bullion EFT? So am I. Just the world “gold bullion” is kind of catchy. Very attractive and fascinating Claymore Gold Bullion EFT.

More about Claymore Gold Bullion EFT (CGL)

Since May 28, 2009, Claymore provides the chance for investors to have exposure in gold bullion through the Claymore Gold Bullion Trust (CGL.UN). These being done without the high transaction and insurance fee, the handling, storage those are normally associated to gold bullion. While purchasing Claymore Gold Bullion EFT (CGL), if you wonder where in the world is being stored the “physical gold”, well, it’s being stored in the vaults of ScotiaMocatta, a division of the Bank of Nova Scotia. So your gold will be store in a safe place lol.

Ok, so back in 2009, the Claymore Gold Bullion was a Trust, a closed-end fund, which means an .UN investment like we like to name them. At the time, the initial public offering was at $10 per unit, for a total offer of 40,000,000 units. The investment was pretty affordable and basically everyone who had an interest in Claymore Investments and in Gold could invest in the Claymore Gold Bullion Trust. And this is exactly what we like the most about this financial product: its accessibility, not to name also its participation in gold itself. Pretty interesting stuff!

In January 2010, with $816-million under its belt, the Claymore Gold Bullion became an exchange-traded fund (EFT). We never personally invested in an exchange-traded fund before. So let’s hear the experts, see what Claymore Investments had to say regarding EFT: “An ETF is an investment fund that trades throughout the day on stock exchanges during normal trading hours. ETFs combine the advantages of investing in index funds, including diversification and low costs, coupled with the liquidity and flexibility of investing in individual stocks. ETFs offer investors many advantages over other investment vehicles, including enhanced tax efficiency, all day liquidity and complete transparency. ETFs are designed to closely track the holdings and performance of their designated index, whose selection methodology can be either passive or strategic.” Interesting, isn’t?

So the Claymore Gold Bullion changed from Claymore Gold Bullion Trust (CGL.UN) to Claymore Gold Bullion ETF. The hedged common units of the fund than began to be trade on the Toronto Stock Exchange (TSX) under CGL. At the time, it’s seemed like Claymore Investments wanted to make the trading easier for its new gold bullion product. The fact that the Claymore Gold Bullion change from Claymore Gold Bullion Trust (CGL.UN) to Claymore Gold Bullion ETF (CGL) didn’t changed, according to Som Seif, President of Claymore Investments, and the investment objective or investment restrictions of the fund. The name had changes, but it’s always the same good “gold bullion” product. Also, Claymore Gold Bullion EFT (CGL) is the very first physical gold bullion of Canadian ETFs.

This meaning that investors can now invest in Claymore Gold Bullion ETF (CGL) in the same way they invest in stocks over the Toronto Stock Exchange (TSX). Commission fees required by online brokers are the same for EFT as for stocks. Which mean that if like myself, you are a small investor who trade through T D Waterhouse, you will pay 29$ in commission fee in order to make the acquisition of some Claymore Gold Bullion ETF units, not to call them stocks. They are being trade like stocks, but they are not stocks, they are pieces of the reconstitution of an index and, more specifically in this case of the value of gold bullion. Simple and easy as 1-2-3. And good news for small investors likes us: the management fee for the Claymore Gold Bullion is only of 0.50%! Also, just like other stocks, it’s possible to listed options on the Claymore Gold Bullion ETF. This feature had been added on February 19, 2010, for the greatest pleasure of investors.

Investing in EFT allow small investors like ourselves to take advantage of the TSX without assuming all the risks. A large part of our investment portfolio is invested in stocks and units trade on the TSX. So we appreciate the qualities our newest Claymore Gold Bullion ETF acquisition. But be aware, EFT investments are not guaranteed investments. EFT investments are not risk-free investment, but an EFT like the Claymore Gold Bullion EFT can certainly bring a certain stability to an investment portfolio. We could see the EFT a bit like mutual funds, but without the high fees. The Claymore Gold Bullion ETF (CGL) is eligible for registered plans like RRSP, RRIF, RESP, DPSP and TFSA, and also non registered plan.

The Claymore Gold Bullion ETF (CGL) completes our RSP investment acquisitions of today. Earlier this morning, we purchased 200 units of Claymore Gold Bullion ETF (CGL). We pay 10.14$ per units. But here’s your change for purchase Claymore Gold Bullion ETF (CGL) at a cheaper price on Monday maybe, at the opening, since the Claymore Gold Bullion ETF close today at 9.99$. Like other financial products and stocks and units, Claymore Gold Bullion ETF has to face the market volatibility. But good news, no matter what, Claymore Gold Bullion ETF value remains relatively stable. Claymore Gold Bullion ETF lowest value since inspection had been of 9.99$ and the highest had been 10.75$. We add today the Claymore Gold Bullion ETF (CGL) thinking this investment could possibly add value to our investment portfolio. We will follow the progression of our Claymore Gold Bullion ETF (CGL) investment in the next couple of months.

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