Ask the Spud: iShares Gold Trust

July 25, 2011

Q: The iShares Gold Trust (IGT) trades on the Toronto Stock Exchange, but I can’t find it on the iShares Canada website. Can you tell me why? — Jim O.

The iShares Comex Gold Trust is an exchange-traded product that tracks the price of gold. Like its competitor, SPDR Gold Shares (GLD), the trust is backed by gold bullion held in a vault by a custodian.

But although IGT is listed on the Toronto Stock Exchange, it is not a Canadian product. It’s simply a cross-listing of the iShares Gold Trust (IAU), which is domiciled in the US and traded on the NYSE. That’s why it isn’t included on the iShares Canada site.

If you’re not familiar with cross-listing, it’s a common practice among large corporations that want their shares to trade in more than one currency (and sometimes more than one time zone). For example, while Research in Motion is a Canadian company traded on the TSX, you can also buy its shares in US dollars on the NASDAQ. There are many other examples of companies with dual listings, including Potash Corporation, Canadian Natural Resources, and all of the big banks.

When shares of a company (or a product like the iShares Gold Trust) trade in two different currencies, there is no benefit to buying one or the other, except for the convenience of not having to convert your currency. At the market close on July 22, for example, the last trade in IGT was made at $14.86 CAD, while the last trade in IAU went through at $15.65 US. At the current exchange rate, those two amounts were identical.

Why have they performed so differently?

IAU was launched early in 2005, and the cross-listing was added in December of that year. If you enter both ticker symbols in a stock chart, they seem to have performed very differently. Over the last five and a half years, IAU shows a much higher return: almost 211% versus just 152% for IGT:

You might conclude from this chart that you would have been better off holding IAU. But this is an illusion: the returns of IAU are expressed in US dollars, while those of IGT are given in loonies. To an investor measuring her returns in Canadian dollars (as most of us do), the returns of the two versions would have been the same. The apparent difference is entirely the result of the USD/CAD exchange rate.

Here’s how the math works, with the numbers rounded for simplicity:

  • In December 2005, $1 US was worth $1.16 CAD. A Canadian investor could have bought $100 USD worth of IAU, or $116 CAD worth of IGT. These amounts would have bought an identical number of shares.
  • By July 2011, the value of IAU had increased by 211%, so $100 USD would have become $311 USD.
  • Meanwhile, an investor in IGT would have enjoyed a 152% return, turning $116 CAD into $292 CAD.
  • During this period, the value of the US dollar declined from $1.16 to $0.94 CAD.
  • If both sold their shares in July 2011, the IAU investor would have received $311 USD, while the investor in IGT would have pocketed $292 CAD. At the current exchange rate ($1 USD = $0.94 CAD), those two amounts are equivalent.

This should make intuitive sense when you remember that IAU and IGT are the same fund, holding the same gold bars in the same vaults. A gold bar is a gold bar, no matter what country you live in or what currency you use. If you buy an ounce of gold in Windsor, Ontario, and then drive across the border to sell it in Detroit—or vice-versa—you can’t expect to make a profit.

Or to use a different example, if you buy 100 shares of a cross-listed company like Research in Motion on the TSX, wait for the loonie to go up 10%, and then sell them on the NASDAQ, you won’t make a 10% profit. You’ll just have 10% more US dollars, each of which is worth 10% less.

The bottom line for investors is that if you want exposure to gold and you have Canadian dollars in your account, then buy IGT. If you have US dollars in your account, then you can use IAU. Either way, your exposure to gold is the same, and your exposure to the US dollar is zero.

Got a question about index investing? Send it to and it may be answered in a future installment of “Ask the Spud.” Answers are provided as information only and do not constitute investment advice.

{ 18 comments… read them below or add one }

john July 25, 2011 at 8:37 am

Does that mean that IGT is effectively hedged to eliminate currency variations?

Jim O'Keefe July 25, 2011 at 8:58 am

Great information! Thanks for such a clear explanation.


Canadian Couch Potato July 25, 2011 at 9:26 am

@John: No, IGT is not hedged, because there is no currency exposure to hedge. The underlying security is gold, not US dollars. Although the price of gold is always quoted in US dollars, holding an ounce of gold does not expose you to fluctuations in the US dollar. That was the point I was trying to make in the post.

Later this week I will look at Claymore’s CGL, which does add a currency hedge. I’ll discuss why this is a dubious strategy.

@Jim: Thanks, and glad this helped.

Sean July 25, 2011 at 11:41 am

If a US company “cross-lists” in Toronto, are the dividends considered Canadian? Is there a way to get a list of these cross-listed shares? (special symbols?)

Obviously, the gold bullion doesn’t pay dividends but another company might.

Canadian Couch Potato July 25, 2011 at 12:33 pm

@Sean: Sorry, a US company is still a US company and does not qualify for the dividend tax credit even if it is cross-listed on the TSX.

I’m not aware of any master list of dual-listed companies. Can anyone else help?

Sean July 26, 2011 at 1:46 pm

I think if Wal-mart (Mickey D’s, Home Depot, Lowes, etc) list in Toronto, the dividends from the TSX listed shares would be considered Canadian since they pay tax in Canada(?)

I guess they have enough red tape setting up shop here let alone go through a whole set of listing regulations.

Canadian Couch Potato July 26, 2011 at 4:12 pm

@Sean: No, that’s incorrect. Only Canadian corporations pay “eligible dividends,” and US corporations that do business in Canada and cross-list on the TSX do not qualify as Canadian corporations.

Zig October 3, 2011 at 5:01 pm

Coming back to IGT, does this mean one would be subject to US estate taxes, if death occurred while holding this ETF? Thanks

Canadian Couch Potato October 3, 2011 at 6:11 pm

@Zig: I don’t think so, but this is a complex and confusing topic. It’s on my list of issues to research: stay tuned.

Dario December 26, 2011 at 3:36 pm

Money Sense is my favourite magazine – keep up the good work!!

My question is – can I assume that IGT-T and MNT-T would provide the same returns going forward? Is one product ‘better’ than the other one? I believe that IGT-T has an MER of 0.4% – not sure what the MNT MER works out to….


Canadian Couch Potato December 27, 2011 at 5:44 pm

@Dario: In theory, the products should deliver similar performance, since they track the same commodity price. But in practice you cannot assume anything. I would wait to see how closely MNT tracks the price of gold after a year or so. The fact that the fee is not easy to find is a red flag.

newbie investor March 1, 2012 at 1:58 am

If I buy IGT in TFSA, would it cause any withholding tax deduction?

Canadian Couch Potato March 1, 2012 at 9:27 am

@Newbie: Gold pays no dividends, so you don’t have to worry about the withholding tax.

André September 16, 2012 at 10:02 am

Hi Dan,
I know you wrote this article some time ago but I hold GLD as part of my portfolio and have been investigating avenues in order to be able to trade (re-balance) in $CDN. IGT seems to be the most obvious choice. However, I believe I read something recently about IAU. If memory serves, it said that IAU would try to mimic daily price movements of gold. Would this make you change your mind about IGT has a good choice for canadians willing to hold gold for the long term?
Thanks for your help

Canadian Couch Potato September 16, 2012 at 10:42 am

@André: IAU does indeed track the daily price of gold: so does GLD. The two funds are almost identical. IGT also gives you the same exposure but allows you to trade in Canadian dollars.

Yaz February 22, 2013 at 2:55 pm

The MNT Fee is 0.35%:

Will the Mint charge a Service Fee for providing the Program?
Yes. The Mint will charge a Service Fee in respect of its management, storage and custodial services. The Service Fee will be calculated and accrued daily at an annual rate of 0.35% of the Per ETR Entitlement to Gold on each day of all outstanding ETRs and paid monthly in arrears on the 15th day of each month (or if not a business day, on the next succeeding business day). Each month, the Mint will withdraw an amount of gold bullion equal to the Service Fee. Accordingly, the amount of gold bullion underlying each ETR will decrease over time as the Service Fee is accrued. The Service Fee may be varied by the Mint at any time, but only after giving ETR Holders 90 days’ advance notice of any such change.

Matt March 26, 2013 at 6:15 pm

Is there a preferred location to hold IGT within one’s portfolio? TFSA, RRSP, non-registered, etc?

Canadian Couch Potato March 26, 2013 at 8:29 pm

@Matt: Because gold pays no income, the only potential tax is from capital gains. Obviously you avoid that in an RRSP or TFSA. In a non-registered account you can at least defer the tax as long as you want to by not selling any shares.

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