FAQs

Overview of frequently asked questions

How can I order Xetra-Gold?

Xetra-Gold® (WKN: A0S9GB / ISIN: DE000A0S9GB0) can be purchased via any securities ordering system that provides access to the electronic trading system Xetra. Xetra-Gold is also traded on the trading floor of the Frankfurt Stock Exchange and various other regional stock exchanges. Xetra-Gold is publicly offered in Germany, Austria, Luxembourg as well as the Netherlands and Great Britain.

Is Xetra-Gold fully backed by gold?

Xetra-Gold is always backed 100 percent by gold. The majority of the gold (95 percent) is held in custody in physical form in the vaults at Clearstream - Germany's central securities depository. The remainder is kept at Umicore AG & Co. KG, Hanau, in the form of delivery claims on gold.

How secure is the safe custody of gold?

The physical backing for Xetra-Gold is stored according to high security standards in the German central vault for securities, where assets worth several trillion euros are kept.

Is the gold insured against loss?

The physical gold is insured up to €125 million per calendar year against unintentional loss. Security experts do not consider higher coverage necessary.

What are the costs for safe custody?

Fees amounting to 0.025 percent are charged monthly for safe custody; Clearstream Banking AG, the custodian, deducts these fees along with the securities account fees. Which of these fees (plus VAT) are passed on to investors depends on the contractual relationship between the buyers of Xetra-Gold and the bank maintaining their securities account.

How does delivery work?

Investors should contact their own bank about having gold delivered. For operational reasons, gold can only be delivered to one branch of a bank. The investor's client advisor applies for delivery to the bank maintaining the investor's securities account. A more in-depth description of the process is available at www.xetra-gold.com.

Which risks and opportunities are associated with the purchase of Xetra-Gold?

Opportunities

  • Portfolio stabilization
    Xetra-Gold® largely reflects the value of the commodity gold, which develops more or less independently of other securities. Adding Xetra-Gold to the portfolio can help to diversify risk and stabilize performance.
  • Participating in the performance of the gold price
    Given continued strong commodity demand and constant production capacity Xetra-Gold offers attractive potential returns.
  • Securitization
    Each Xetra-Gold note grants the investor the right to the delivery of one gram of gold from the issuer or, alternatively, if an investor is not permitted to take delivery of gold for legal reasons, to demand repayment of Xetra-Gold in cash at its repayment value.

Risks

  • Market risk
    For economic purposes, investors buying Xetra-Gold are invested in gold and are exposed to the market risk relating to gold. If the gold price falls, the investor can lose part or all of the capital invested. As there are other price-relevant factors besides the gold price (such as the credit quality of the issuer), the value of Xetra-Gold may deviate from the gold price.
  • No beneficial ownership to gold
    Investors investing in Xetra-Gold acquire the rights securitized in the notes. Investors do not acquire ownership/beneficial ownership or a lien to the gold held in custody in physical form on the issuer’s behalf or to the issuer’s account gold claims.
  • Risk of loss
    The gold held in custody in physical form by Clearstream Banking AG on the issuer’s behalf is exposed to a risk of loss. Should such risk of loss for the issuer materialize, this would probably impair the issuer’s ability to meet its obligations on the notes as there are no other assets available.
  • Tradeability
    There is no guarantee that a secondary market in Xetra-Gold will evolve. This harbours the risk that investors may not be able to sell Xetra-Gold in the market, or not at all times.
  • Early redemption
    In case of early repayment, to which the issuer is entitled in certain circumstances, there is the risk for investors that the early redemption amount paid may be lower than the value of Xetra-Gold before the notes were called by the issuer.

Disclaimer

The risk factors listed above are not exhaustive and do not provide a comprehensive overview of all the risks associated with an investment in Xetra-Gold. Before investing in Xetra-Gold, investors should read the prospectus and take independent advice.

Is the stored gold lent out?

No. The physical backing for Xetra-Gold is not lent out.

Is Xetra-Gold quantoed?

An investment in Xetra-Gold is a position in gold in exchange for euros only. So there is no exchange rate risk for investors in the euro zone. However, the price of Xetra-Gold is based on the world market price for gold and current exchange rates.

Which gold price is relevant to Xetra-Gold?

The price of Xetra-Gold is based on the world market price for gold, taking into account current exchange rates. Gold is usually quoted in US dollars per troy ounce on the world markets (one troy ounce = 31.1035 grams).

What costs are involved when buying and selling?

The only costs involved when buying or selling Xetra-Gold are the usual fees which banks charge investors for securities transactions on stock exchanges. No front-end load or management fees are charged.

What are the costs for delivery?

Investors can exercise their Xetra-Gold securitized right to delivery of one gram of gold per bearer note at any time. The costs incurred comprise the molding of gold bars, packaging, transportation, insurance and a settlement fee from Clearstream. For the delivery of a one-kilo gold bar, these costs are comparable with the trading spread for direct purchase of a one-kilo bar from a bank or gold trader: 275 EUR within Germany. Detailed information on the delivery process and the associated costs is available in a separate document.

How is Xetra-Gold treated in terms of final withholding tax?

The Federal Ministry of Finance (Bundesministerium der Finanzen – BMF) published a new implementation decree on final withholding tax (Abgeltungsteuer) on 22 December 2009. This decree also regulates the tax treatment of income investors earn with securities physically backed by gold or another commodity and securitizing a claim to physical delivery of the underlying.

This implementation decree has the following tax consequences for private investors living in Germany that invest in Xetra-Gold (ISIN: DE000A0S9GB0), which is backed by, and securitizes a claim to, physical gold:

If an investor makes a profit in redeeming his delivery claim on Xetra-Gold, this profit is subject to final withholding tax. Physical gold delivered upon redemption is therefore deemed as purchased at this time. The profit earned on selling this gold at a later date is subject to income tax based on the tax rate if the physical gold is sold within one year of purchase. 

Any profit investors make on selling their securitized claim Xetra-Gold is also subject to final withholding tax. This does not apply, however, if it was purchased prior to 31 December 2008 and either the proceeds from the sale were generated by 30 June 2009 or the sale/redemption occurred within one year of purchase.

In its implementation decree, the financial authorities assume that the securitized delivery claim Xetra-Gold is a capital claim subject to final withholding tax. The issuer, on the other hand, does not see Xetra-Gold as a capital claim but as a securitized delivery claim. The purchase and sale of the physically gold-backed Xetra-Gold is thus treated, for tax purposes, just as the purchase and sale of physical gold in the form of coins or bars in direct sales. Deutsche Börse Commodities GmbH is thus currently examining taking legal recourse against this implementation decree.

What is the difference between Xetra-Gold and a gold fund?

Xetra-Gold is legally considered a bearer bond, which represents the right to delivery of gold, is backed by physical gold, and is a delivery claim against Umicore.

A gold fund is a fund that is launched by an investment company and that invests in gold equities.

What is the difference between Xetra-Gold and a gold ETF?

Xetra-Gold is legally considered a bearer bond, which represents the right to delivery of gold, is backed by physical gold, and is a delivery claim against Umicore.

A gold ETF is a secured or unsecured bearer bond that represents a claim to payment or delivery of gold. ETF stands for exchange-traded fund. It would actually be more accurate to speak of an exchange-traded commodity (ETC), as legally these are bearer bonds, not funds. Xetra-Gold is also an exchange-traded commodity.

What is the difference between Xetra-Gold and gold equities?

Xetra-Gold is legally considered a bearer bond, which represents the right to delivery of gold, is backed by physical gold, and is a delivery claim against Umicore.

A gold equity is a unit certificate participating in a gold mining or gold exploration company.

What is the difference between Xetra-Gold and gold certificates?

Xetra-Gold is legally considered a bearer bond, which represents the right to delivery of gold, is backed by physical gold, and is a delivery claim against Umicore.

A gold certificate is a bearer bond, which securitizes a payment claim to an amount which is determined by the price of gold. Examples include warrants, mini long/short futures and quanto certificates. Gold certificates are not backed by physical gold.

What is the difference between Xetra-Gold and a gold bar?

Xetra-Gold is legally considered a bearer bond, which represents the right to delivery of gold, is backed by physical gold, and is a delivery claim against Umicore.

A gold bar is physical gold which many investors keep at home in order to have a universal means of payment in the event of crisis.

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