I advocate owning at least a bit of physical gold and silver, suggests Peter Krauth, a specialist in gold and silver investing and editor of Gold Resource Investor.

Unfortunately, silver coins and bars in small denominations continue to sell at historically high premiums to the spot price of silver. They’re currently nearly 40% above spot, whereas premiums have historically been about 12% - 15% for smaller silver products.

With premiums still so high on silver, looking at other options could make sense. Once again, remember that ETF products are not a replacement for physical metals. However, they can be an interesting way to gain exposure to gold and/or silver prices, while waiting for premiums to return to something closer to normal. Investors can then sell their ETF holdings and use the proceeds to buy physical metal.

I recently discovered that the Royal Canadian Mint offers four such products. There are Toronto-listed gold and silver ETRs (Exchange Traded Receipt), available in Canadian and US dollar versions


Royal Canadian Mint (Toronto: MNT) is the Toronto-listed gold exchange traded receipt while Royal Canadian Mint (Toronto: MNT-U) is the US-dollar version of the ETR. These gold ETRs currently have a total of $462M in assets. The ETR is issued by the Royal Canadian Mint, and these are direct unconditional obligations of the Mint.

That means they are backed by the full faith and credit of the Government of Canada. The holdings are stored at Mint facilities in Ottawa, Ontario, on an unallocated basis. That means it is not separate from other gold bullion held at the Mint.

Fees are a reasonable 0.35% annually, and the gold bullion is beneficially owned by the ETR Holders and not by the Mint. Holders have the right to redeem for gold bullion or cash on a monthly basis.

However, gold bullion must be for a minimum of 10,000 ETRs. At today’s value of about $24.50 per unit, that’s the equivalent of about $245,000, a steep minimum for most investors. However, receiving cash for a smaller redemption amount is the alternative.

Here is a link to more information: www.reserves.mint.ca/tsx_gold/


Royal Canadian Mint Canadian Silver Reserves (Toronto: MNS) is the Toronto-listed silver exchange traded receipt while Royal Canadian Mint Canadian Silver Reserves (Toronto: MNS-U) is the US-dollar version of the ETR. The legal setup is the same as for the gold ETRs.

Fees are slightly higher for the silver ETRs at 0.45% annually. In the case of silver, a minimum redemption is for 5,000 ETRs. With the Canadian ETR trading for about $16.60, that’s roughly $83,000. It’s much less than for gold, but still pretty steep. Again, investors always have cash as a redemption option.

You can find more info here: www.reserves.mint.ca/tsx_silver/

The minimum physical redemptions from these ETRs appear to be lower than for most other physically backed exchange-traded products.

But there is one important caution to heed. While the assets held in these ETRs are of respectable sizes, the daily trading volumes can be surprisingly low. Investors need to be careful about that, as when it comes time to buy or sell, it could take some time for those orders to get filled.

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