VanEck Merk Gold ETF (OUNZ): Physical Redemption Explained

VanEck Merk Gold ETF (OUNZ) offers investors a way to track gold prices while holding physical gold, such as London Good Delivery bars. Unique for enabling share redemption for physical gold (bars or coins) starting at one ounce, its simple delivery process involves a delivery application, fees, and broker instructions. Shipping is insured, with choices like 1-ounce coins or 10-ounce bars, and a website calculator aids planning. With an expense ratio of 0.25% and around $1 billion in assets under management, OUNZ is lauded for its flexibility, affordability, and investor-friendly redemption.

Key Points

• Physical Gold Backing: OUNZ is structured to hold physical gold in allocated London Good Delivery bars, aiming to track the spot price of gold.
• Physical Delivery Option: The key differentiator of OUNZ is its provision for investors to redeem shares for physical gold.
• Minimum Redemption Quantity: A minimum redemption of one ounce is a significant advantage and aligns with information often cited about OUNZ. Many other ETFs with a physical delivery option have much higher minimums.
• Delivery Process: The described process of submitting an application, paying fees, and coordinating with a broker is typical for physical redemptions of ETF shares. The mention of insured shipping and options for coins or bars also aligns with common practices.
• Non-Taxable Event (for US Investors): In the United States, taking physical delivery of the underlying asset of an ETF (like gold) is generally not considered a taxable event, as it's viewed as receiving your pro-rata share of what the ETF already holds.
• Expense Ratio: An expense ratio of 0.25% is competitive within the gold ETF landscape.
• Assets Under Management (AUM): An AUM of approximately $1 billion is a reasonable figure for a well-established gold ETF like OUNZ.
• Notable Features: The description accurately highlights OUNZ's flexibility, competitive fees, and investor-friendly delivery process as key reasons for its popularity among those wanting physical gold exposure.

Delivery Details

The VanEck Merk Gold ETF allows investors to redeem shares for physical gold, distinguishing it from other gold ETFs.

• While there's no delivery fee for the lower 48 states, investors must pay a Processing Fee, which includes an Exchange Fee but excludes delivery costs.

 Redemption starts at one ounce, with options for gold coins (e.g., American Gold Eagles), smaller bars (e.g., 1- or 10-ounce), or London Good Delivery bars (~400 ounces). 

The process avoids taxable events 

• Taking delivery of gold is not a taxable event as investors merely take possession of what they already own: the gold  (VanEck FAQ; IRS guidelines on in-kind redemptions). 

and involves a delivery application, processing fees, and insured shipping. Smaller shipments use conventional carriers, while larger or international deliveries may require armored services. Gold is stored in JPMorgan Chase's London vault. For details, consult VanEck’s website or prospectus.

Conclusion

To ensure complete accuracy and the most up-to-date information, it's always recommended to:

• Consult the official VanEck Merk Gold ETF prospectus and website. This will provide the most current details on the redemption process, fees, minimums, and any recent changes.
• Verify the tax implications with a qualified financial advisor as tax laws can be complex and vary based on individual circumstances and jurisdiction.
• Check recent market data for the current AUM as this figure can fluctuate.