Cheers DC. I am not writing your theory off yet. I agree, sounds...

Cheers DC. I am not writing your theory off yet. I agree, sounds difficult to make a profit. I wonder if the 0.40% per annum management fee is enough to turn a profit...? Also, I've been wondering where that comes from. They say the ETF tracks the price of gold, but what happens to the 0.40% management fee? Is it shaved off the unit price, calculated daily or annually? If the former, does it compound? Presumably then the unit price will gradually reduce over time, diverting away from the physical price?

Here is some information from the ASX GOLD fact sheet:

About the security
GOLD is a transferable security that can be created or
redeemed on demand by market-makers, and that can be
redeemed by investors. It trades on exchange as an equity.
GOLD is backed by physical allocated metal held by the
Custodian (HSBC Bank USA N.A.). All physical gold metal
held with HSBC conforms to the London Bullion Market
Association’s (LBMA) rules for Good Delivery.

Security features
Underlying metal Physical, allocated gold, to LBMA specifications
Custodian of metal HSBC Bank USA N.A.
Product manager ETF Securities Ltd
Issuer ETFS Metal Securities Australia Ltd.
Registrar Link Market Services Limited
Management fee 0.40% p.a.
Entry/Exit fees None when traded on Exchange
Legal Form Redeemable preference share with an
entitlement to metal
Open-ended Yes
Domicile Australia
Regulator Australian Securities and Investments
Commission (“ASIC“)

The Custodian is HSBC. I would not be too surprised if the gold was actually leased to ETF Securities, which would mean your theory is correct. You've really got me thinking now DC!

I would also like to share the fact that ASX GOLD has been my worst performing gold stock this year. I have put it down to the strengthening of the AUD and the commensurate fall in the AUD gold price. All the gold mining stocks I have invested in since the beginning of the year are in positive territory.