Mint Sees Gold (and Silver) in TSX OfferingMint Sees Gold (and Silver) in TSX Offering;
Considers Launching ETF-like Product
Paul Waldie
The Globe and Mail, Toronto
Wednesday, July 26, 2006
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The Royal Canadian Mint is considering launching an investment
product on the Toronto Stock Exchange as a way of tapping into the
growing demand by investors for precious metals.
The Mint is trying to develop "a new type of investment" that would
be listed on the TSX and be eligible for registered retirement
savings plans, according to a tender document released last week by
the Crown corporation. The investment is expected to track the price
of gold and silver in much the same way as an exchange-traded fund,
or ETF.
"We're looking at everything," said David Madge, executive director
of bullion and refinery services at the Mint. "It would be premature
to say we are looking at one thing or another thing. We want to look
at what's out there and what the possibilities are."
The Mint put out the tender for "legal advisory services" to help
structure the product. According to the tender document, the
corporation wants advice on how to design the investment, ensure that
it qualifies for RRSPs, and get it listed on the TSX either through
an initial public offering or a private placement. The total budget
for the development is between $500,000 and $1-million, the document
noted.
Mr. Madge did not put a time frame on the project, but said: "I'd
really like to come back to you in three months ... once we get some
feedback as to what direction we are going to go in."
With the price of gold and silver hitting record highs in recent
months, investors have been clamouring for new ways to buy the
metals.
That demand has spurred the creation of several ETFs that mirror the
price of gold, silver, platinum, and other commodities, including
oil.
Exchange-traded funds trade like shares and they have become a
popular way to invest in precious metals without buying the physical
commodity.
The Mint has been following the growing investor demand with
interest, Mr. Madge said. Its own sale of silver coins has been
hitting record levels in recent months as the price of that metal has
soared.
"Silver Maple Leaf coin sales right now have gone through the roof.
They are just flying out faster than we can make them, which is a
good thing," he said.
The Mint has the capacity to refine about six million ounces of gold
annually and it recently began refining silver as well. Most of the
refined metal is used to produce coins -- regular currency and
specialty products -- as well as gold and silver bars and wafers.
Last year the federal government changed the regulations for RRSPs
and expanded the list of qualified investments to include gold and
silver bullion coins and bars, as well as certificates for those
investments. Mr. Madge said those changes prompted the Mint to start
thinking about new investment opportunities.
If the Mint goes ahead with its plans, it will be among the few in
the world to move into the investment market. The Perth Mint in
Australia has gold and silver certificate programs that allow
investors to purchase these metals without holding the commodity.
Three years ago, the Perth Mint also developed the Perth Mint Gold
Quoted Product, which is a warrant listed on the Australian Stock
Exchange that tracks the price of gold.
Mr. Madge said most mints are government agencies that are not
required to turn a profit.
However, the Canadian mint operates like a business, and it is
constantly looking for new sources of revenue, he said. "We're
looking at anything we could do that would make a profit and offer a
good service to our customers and the industry," Mr. Madge said. Last
year, the Mint's revenue increased 32 percent to $435.9-million, but
its profit fell to $8.7-million from $10.6-million the year before.