Finanztest: Xetra-Gold in the spotlight

In the May 2016 issue of Finanztest, a prestigious German magazine offering independent and reliable consumer information on financial products, ETCs on gold were analysed as an alternative to physical gold. Finanztest focused on gold ETCs that include the right for physical delivery of the precious metal and, therefore, are backed by gold. This feature separates the respective products from other ETCs on gold which, in some cases, are designed similar to certificates. The use of leverage products involves a higher risk of total loss of the investment for investors in case of bankruptcy of the ETC issuer. The first result of Finanztest's analysis: there are very few ETCs that offer physical delivery of gold. This alone represents a USP for the only three existing products Euwax Gold, Gold Bullion Securities and Xetra-Gold.

Finanztest further stated that purchasing gold ETCs can be more cost-efficient than the acquisition of physical gold, provided the option for physical delivery is not used. Finanztest's reviewers determined a saving of € 220 when buying Xetra-Gold compared to the purchase of 500 grams of physical gold towards at a specified date in April 2016. Finanztest also recognised the fact that Xetra-Gold is backed 100 percent by more than 70 tons of physical gold as a security anchor for investors. Another advantage of Xetra-Gold over competitors is the fact that there is no minimum size: starting with the equivalent of one gram of gold, any securitised amount of Xetra-Gold can be purchased. This advantage, however, has to be put into perspective by investors wishing to make use of the physical delivery option, since they have to take into account a minimum delivery fee of € 315.

Finanztest is a print publication issued by Stiftung Warentest, a consumer organisation founded by the German government in 1964 to aid consumers in making educated choices by providing in-depth product reviews and comparisons.

Arnulf Hinkel
Financial journalist