It seems Canadians have a love for glittering gold.
The Royal Canadian Mint has been overwhelmed with demand for its new Canadian Gold Reserves' Exchange Traded Receipts (ETRs), which began trading on the Toronto Stock Exchange on Tuesday.
The Mint announced that trading on the securities had begun Tuesday, after it closed the initial public offering. The IPO raised $600 million -- more than double the Mint's original target.
The ETRs are trading on the Toronto Stock Exchange (TSX) under the ticker symbol MNT in Canadian dollars, and MNT.U in US dollars. Thirty million ETRs were issued at an initial price of $20 each and each ETR entitles holders to about 0.0109 ounces of gold.
Exchange-traded receipts are a unique investment that many Canadians may not be familiar with.
What's an ETR?
Unlike shares in a gold mining company, for example, each ETR represents ownership in actual, physical gold bullion, which the Royal Canadian Mint will now buy with the money it's raised in the IPO.
ETR holders can redeem their receipts for physical gold products at any time in the form of 99.99 per cent pure gold bars or coins, or for cash, based on the future gold price or market price of the ETRs.
Gold has been a hot commodity in the last few years, with the price for the precious metal rising every year for 10 consecutive years.
The price reached a record high of $1,923.70 an ounce in early September in New York.
This year alone, the price has risen 19 per cent as investors look for somewhere safe to place their money while Europe's debt crisis threatens to sink the global economy.
Ian E. Bennett, the president and CEO of the Royal Canadian Mint says the Mint was overwhelmed by the demand.
"The tremendous response to the Mint's Canadian Gold Reserves ETR program is a compelling endorsement of this product as a convenient, economical and secure way to invest in gold," he said in a statement.
"By selling a security representing direct ownership to physical gold stored at the Mint, we have creatively leveraged our 100 year-old gold refining and storage expertise to help investors confidently own gold."
