The Royal Mint is to capitalise on its brand strength to offer investors a way of tracking the performance of the gold price with the launch of its first financial product in its 1,100-year history.

The sovereign mint will launch a gold exchange-traded fund (ETF) in the UK, Germany and Italy from the start of next year.

Investors will buy the fund via an investment platform and hold it in an ISA, SIPP or dealing account, rather than taking physical ownership of the gold itself.

Traditionally The Royal Mint has sold gold coins as a way of investing in the precious metal.

'ONE OF THE UK'S MOST TRUSTED'

It will offer investors the chance to add the precious metal to their portfolios ‘safe in the knowledge that they’re working with one of the UK’s most trusted organisations’, according to Jatin Patel, head of wealth management at The Royal Mint.

All of the physical gold associated with the fund will be stored in The Royal Mint’s vault, one of the most secure sites in the UK which is guarded 24/7.

Despite The Royal Mint’s obviously strong reputation making the fund a seemingly safe as houses investment, it’s worth noting there a number of gold ETFs already available to investors.

Invesco, Xtrackers (the ETF arm of Deutsche Bank) and iShares (BlackRock’s ETF division) all offer similar products also backed by physical gold, with the iShares product charging a total of 0.25%.

Therefore The Royal Mint will have to be very competitive on charges if it is to attract money into its gold ETF. Details on its fees have yet to be made available.

GOLD SOARS, BUT FOR HOW LONG?

The price of gold has soared in the past year as economic and political problems stack up across the world, raising fears of a global recession.

Gold typically does well when the stock market does badly, because investors see the relative stability of its price as a safe place to put their money.

Some market watchers, such as analysts from Morgan Stanley, think the gold price could hit an all-time high next year of around $2,200 per ounce. The price of gold currently stands at around $1,500 an ounce.

Analysts at Capital Economics think gold will drop to $1,350 an ounce by the end of next year because economic problems in the US and other big economies probably won’t be as bad as investors are expecting.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing Account.

Issue Date: 09 Sep 2019