The UK will this week follow Australia’s lead and be the second country in the world to list gold on its stock exchange as Gold Bullion Securities. It follows an extraordinary series of events which saw Australia develop a structure to enable securitised gold to be listed on the Australian Stock Exchange. It was the first time gold bullion could be traded on a stock exchange anywhere in the world and provided a precedent for listings in other countries.
The floating of gold in Australia was a world-first. The idea was developed by Graham Tuckwell, Chairman of Gold Bullion Limited, in conjunction with the World Gold Council. The listing on the ASX was made possible using a sophisticated legal structure developed by Bill Fuggle, a corporate Partner with Baker & McKenzie, which was based on wine securities he developed in 1999 for the Australian Wine Exchange and which were listed on both the ASX and Newcastle Stock Exchange.
Since Gold Bullion Securities (ASX code: GOLD) began trading on the ASX earlier this year, over 8 tonnes of gold have poured into the product, sparking world-wide interest and a desire by the Australian listed company to pursue further listings.
Following a decision by the World Gold Council and Gold Bullion to pursue a listing on the London Stock Exchange, the company specifically requested Baker & McKenzie’s Australian team to work with their London office to advise on listing Gold Bullion Securities tailored for the LSE. Following successful structuring work to suit that market, a similar security will commence trading on 9 December. The LSE listing has attracted intense interest from London brokers and investment banks.
According to Bill Fuggle, “this product completely changes the landscape of gold investment and trading, the increased access to gold should have a number of ramifications including increased demand for gold”.
“One of the reasons for investment in gold is that studies have shown gold is negatively correlated to stock markets, which in laymen’s terms means, when shares go down, generally gold will go up and vice-versa. Effectively what it offers is risk balance in an investment portfolio.”
Graham Tuckwell said “Bill Fuggle has assisted in providing a superb legal structure which has helped enable interests in gold bullion to be traded on stock exchanges, which is something no one has been able to do before. He has displayed an outstanding ability to help solve the myriad of regulatory and tax issues required to turn our exciting financial concept into reality.”