Below you will find a list of International Investor FAQs, Should you require more information, please contact us
What is the minimum I can invest in BMG Funds?
The minimum purchase for the International G9 Class is $5,000, and subsequent purchases can be made for $2,500. Please visit BMG Funds – Price & Performance.
What are the fees associated with investing in BMG BullionFund, BMG Gold BullionFund or BMG Silver BullionFund?
The fees vary. Please contact your financial advisor for more details. A BMG representative will be happy to recommend an advisor with in-depth knowledge of the precious metals markets. Contact us for more information.
Compared to other mutual funds, the fees for BMG Funds appear high. Why is that?
The overall costs of buying and holding units of BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund are competitive with most equity funds, even though the costs associated with hard assets are not comparable to those of paper assets. BMG Funds represent the purest way of owning physical bullion on an allocated and *insured basis. The expenses incurred by BMG Funds exceed the costs of mutual funds that hold stocks or derivatives of physical bullion. BMG Funds are an extremely cost-effective method of owning bullion when compared to purchasing coins or bars from a dealer and arranging and paying for private storage.
*”Insured basis” refers to certain insurance covering the storage of the physical bullion with the BMG Funds’ Custodian, and does not refer to insurance related to a loss in market value of the underlying holdings.
Where can I obtain performance information?
BMG BullionFund and BMG Gold BullionFund and BMG Silver BullionFund are tracked by Cannex, Bloomberg, Globefund, Morningstar Canada, and Fundata Canada. Net Asset Value (NAV) per unit is posted daily on our website. Unit values are also posted on our website: BMG Funds US dollars for International Investors, along with actual ounces held of the three metals, and other statistics. Please note that neither BMG Fund is valued on Canadian or UK holidays.
How much time does it take to liquidate units?
Units of BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund can be liquidated on any regular business day. Under normal circumstances, settlement takes tw0 days.
Why does BMG BullionFund hold all three metals instead of just gold?
Do BMG Funds trade with a premium or discount to their Net Asset Value (NAV)?
BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund are subscribed and redeemed at a rate equal to the NAV of the per-unit price of the Fund in question. They are open-end mutual fund trusts, as are most open-end mutual funds, where there is no limit to the amount of assets they can acquire. As more units are subscribed for, more gold, silver and platinum is purchased by BMG BullionFund, more gold is purchased by BMG Gold BullionFund and more silver is purchased by BMG Silver BullionFund. We believe this separates BMG Funds from other, apparently similar, precious metal investments, which are often closed-end funds, mining stock funds or not pure bullion funds. These other investments often trade at a premium, sometimes a substantial premium. BMG Funds do not trade as closed-end investments do, and hence cannot be bought or sold at a premium or discount. Units are purchased or redeemed at the prevailing NAV, without premium or discount.
How is the valuation of portfolio assets established for BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund?
The value of a class of a Fund (the Net Asset Value (NAV) per unit of a class) is determined in Canadian dollars at the close of business (EST) (the valuation time) on a day when the Toronto Stock Exchange is open for trading (a business day and a valuation date), and is equal to the assets of that class of the Fund minus the liabilities of that class of the Fund divided by the number of units of that class of the Fund that are outstanding.
The assets of each class of a Fund will be valued, as applicable, as follows:
- On dates on which the Toronto Stock Exchange and the London Stock Exchange are both open for business, the value of gold bullion shall be equal to its London PM fix price set by the London Bullion Market Association, the value of silver bullion shall be equal to its London Fix price set by the London Bullion Market Association, and the value of platinum bullion shall be equal to its London Fix price set by the London Platinum and Palladium Market
- On dates on which the Toronto Stock Exchange is open for business, but the London Stock Exchange is closed, the net asset value for that day will be calculated using the following closing prices. For gold and silver, the price will be the COMEX closing price for each of gold and silver respectively. For platinum, the price will be the New York Mercantile Exchange (NYMEX) closing price.
There are already several precious metals mutual funds available in Canada. How are BMG Funds different?
BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund are open-end mutual fund trusts that invest in bullion itself, not in the shares of mining companies.
- Although properly selected mining company shares can yield attractive returns in rising markets, a greater degree of risk and volatility is involved in the ownership of shares, as opposed to investing in actual bullion. The risk exposure of mining companies compares closely to the risk exposure in any equity investment. The overall stock market, political risk, environmental and climactic risk, management risk, financial strength, mine life, production costs, and hedging policies all affect the value of such stocks and the risk involved in owning them. Physical bullion cannot be subject to accounting fraud and is the only asset that is not someone else’s liability. It does not represent a mere promise to pay, like the dollar or a stock certificate.
- Mining company share values can be significantly affected by hedging policies, regardless of the annual production or the amount of reserves a mine may have. In many cases, highly hedged miners have seen their shares decline on a surge in the gold price, and an extraordinary spike in the price of a metal has been known to cause a financial crisis for mining companies.
- During the financial crisis of 2008, Canadian mining stock mutual funds lost between 25 percent and 55 percent, whereas BMG BullionFund lost only 4 percent.
- From a portfolio diversification point of view, conventional precious metals mutual funds would form part of the equity portion of a portfolio. BMG Funds represent a separate asset class that should form the foundation of the cash component of a portfolio.
There are many mutual funds with bullion or precious metals. What makes BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund different
BMG Funds do not compromise the three fundamental attributes of bullion: Liquidity, no counterparty risk and independent of management skills. All of our competitor funds compromise at least one of these attributes.
Learn more about the essential attributes of precious metals: Contact us: The Fundamental Attributes of Gold, Silver and Platinum Bullion.
What can I expect as a return?
Retuns are based on the future price of gold, silver and platinum for BMG BullionFund, the future price of gold for BMG Gold BullionFund and the future price of silver for the Silver BullionFund, in Canadian dollars. The value of each BMG Fund, and hence, an investor’s return, varies with the price of the three precious metals in Canadian dollars. The BMG Funds’ prices are negatively correlated to the world’s major currencies. If currencies decline through debasement, we would expect BMG Funds to advance.
Isn't it cheaper to purchase physical bullion and store it in my safe at home or in a safety deposit box?
With a Management Expense Ratio (MER) to consider, you might think it would be cheaper to purchase bullion and store it at home or in a safety deposit box, but there are several factors to consider.
First, while it is certainly possible to purchase bullion from chartered banks or online bullion companies, these companies charge a premium on bullion, and it can be substantial. Premiums of 4 percent for gold, 15 percent for silver and 8 percent for platinum are typical, and they can be higher during shortages. Selling bullion back to these companies will also result in a price that is discounted from the spot price. Over the three metals, the net premium and discount for buying and then reselling bullion can be as high as 15 percent. Second, the precious metals bullion comprising BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund is held in storage and covered by insurance that covers many risks associated with that storage. Storing bullion at home comes with its own risks. There is the cost of a home safe, storage space issues and the risk of the bullion being stolen. Insurance companies do not provide coverage for bullion stored either in a safety deposit box or in a home safe. Even with an MER of just over 3 percent, it is less expensive to hold bullion in BMG Funds.
If you were to forgo the insurance and hold bullion at home, the premiums and discounts you have to pay makes holding physical bullion unattractive compared to BMG Funds, which purchase physical precious metals at close to spot price.
What are the risks associated with investing in BMG Funds?
BMG BullionFund holds allocated gold, silver and platinum bullion, with the limited objective of providing a secure, convenient, low-cost, alternative for investors seeking to hold gold, silver and platinum bullion for capital preservation and long-term appreciation. BMG Gold BullionFund holds allocated gold bullion and BMG Silver BullionFund holds allocated silver bullion.
As a result, the following risk factors are associated with owning units of BMG Funds:
Precious Metals Risk
The prices for gold, silver and platinum bullion are affected by a variety of factors, including changing supply and demand relationships and international political and economic events. In addition, governments may intervene from time to time, directly and by regulation, in certain markets such as precious metals. These factors will indirectly affect the prices for gold, silver and platinum bullion.
Direct purchases of gold, silver and platinum bullion may generate higher transaction and custody costs than other types of investments.
Availability of Precious Metals Risk
It is possible that BMG BullionFund may not be able to buy gold, silver or platinum bullion from time to time. In such a situation, BMG BullionFund will continue to purchase those metals that are available, but will not be able to achieve its investment objective of holding equal amounts of all three precious metals until all three metals become available again.
Foreign Currency Risk
Gold, silver and platinum bullion are usually traded in US dollars and, as a result, BMG Funds are vulnerable to foreign currency risk, which is the risk that the value of the Canadian dollar will increase as measured against a foreign currency. For example, a precious metal traded in US dollars will fall in value, in Canadian dollar terms, if the Canadian dollar increases in value relative to the US dollar, even though there is no change to the US dollar value of the precious metal. Conversely, if the Canadian dollar falls in value relative to the US dollar, there is a corresponding gain in the value of the precious metal measured in Canadian dollars attributable solely to the change in the exchange rate. BMG Funds do not intend to hedge their foreign currency exposure.
Non-Hedging Strategy Risk
BMG Funds will not invest in derivatives to protect against decreases in the value of gold, silver or platinum bullion.
BMG BullionFund will hold only gold, silver and platinum bullion, BMG Gold BullionFund will hold only gold and BMG Silver BullionFund will hold only silver. As a result, investors should allocate only a percentage of their portfolio to BMG Funds in order to maintain an appropriate level of diversification.
BMG Management Services Inc. is not registered as a portfolio manager, and for this reason BMG Funds have fixed investment policies.
Uninsured Losses Risk
BMG Funds are stored in a London Bullion Market Association (LBMA) member vault on an allocated and insured basis under a custodial agreement with RBC Investor Services Trust operating as RBC Investor & Treasury Services (RBC I&TS) as custodian for the BMG Funds and the appointment by the custodian of the Royal Canadian Mint (the Mint) and certain sub-custodians of the Mint, including Brink’s Canada Limited (collectively with its global affiliates, Brinks), as sub-custodians of the BMG Funds. The Custodian is obliged to maintain insurance satisfactory to BMG Funds against all risk except the risk of war, nuclear incident or government confiscation.
*”Insured basis” refers to certain insurance covering the storage of the physical bullion with the BMG Funds’ Custodian, and does not refer to insurance related to a loss in market value of the underlying holdings.
Sometimes BMG Funds don't move in line with precious metals prices. Can you explain this?
Many factors account for the variable between precious metals’ prices and the prices of BMG BullionFund, BMG Gold BullionFund and BMG Silver BullionFund.
- The Net Asset Value (NAV) per unit for BMG Funds is set via the London Fix price for gold, silver and platinum each day, based on the closing prices for each metal and the prevailing exchange rate. Any investment funds received before 4:00 pm EST will be allocated the appropriate number of units based on the end-of-day NAV. The price of the metals would have fluctuated throughout the day, and the London Fix may be considerably different from the high, the low or the average price. This occurs with all funds; however, with traditional funds that have numerous investments, it is not apparent.
- BMG Funds receive money in both Canadian and US dollars, but always purchase bullion in US dollars, and so incur currency conversion costs. Hedging is something we do not employ due to the added risks and/or costs. Once hedging is employed, the Funds stop being bullion and become dependent on the manager’s hedging skills. Uncompromised bullion is liquid, incurs no counterparty risks, and does not depend on a manager for performance. Hedging would compromise two of these attributes. To employ a hedging strategy and add risk to an asset that is acting as a hedge against currencies defeats the purpose of investing in bullion. BMG Funds are the purest bullion funds available because they maintain the three fundamental attributes of bullion.
- BMG Funds, and indeed all other mutual funds, do not have access to an investors’ deposit to the Trust Account for three days, even though the price of the units purchased was set on the day of investment. Precious metals are purchased when an investor’s funds have cleared and are transferred from the Trust Account. Three days later, the price of the metals and the exchange rate can be higher or lower.
- Even on a daily basis, prices fluctuate. The prices paid for the metals during the day can be higher or lower than that day’s London Fix. There could also be an exchange rate differential, as that too varies throughout the day. The prices paid for the metals are the ask prices. No one can buy at the spot price, be it the NYMEX close or the LBMA price, in the same way, that no one can buy at the last closing price in a stock. Based on this, comparing to spot is unrealistic. There is a bid/ask spread. The ask prices for each metal in a rising market are higher than spot, and lower than spot in a falling market. Here again, there is a differential between the NAV per unit that is based on the London Fix each day. This price does not necessarily represent the average price, can be dramatically different from the high or the low for the day and does not correspond to the actual prices paid by BMG Funds.
- In addition to the ask price, there are transaction costs, including bar charges and insured delivery. BMG Funds do not pay any commissions, nor is there any markup over cost.
- The full amount of each deposit received is not necessarily used to buy precious metals. Some cash – no more than 5 percent – is held aside for expenses and to meet small redemption requests. Currently, the cash component is approximately 1 percent.
The amount of cash is monitored relative to the expenses and redemption requests. Not keeping a minimal percentage in cash would increase overall costs due to selling costs incurred to meet redemption requests. When BMG Funds sell precious metals, they can only receive the bid prices at the time, not yesterday’s spot price. The above factors are fundamentally similar for all mutual funds, including BMG Funds. As such, it is nearly impossible for the percentage change in BMG Funds’ NAV per unit to be exactly the same as the daily London Fix for gold, silver, and platinum in Canadian dollars. The spot prices are simply a theoretical guideline that cannot correspond to the day-to-day realities, even if you were buying the metals directly outside of either Fund.
Buying the metals directly on a retail basis would cost an average of 7 percent above the ask price, plus bar charges. In addition, charges for delivery, delivery insurance, and storage would be incurred. In effect, BMG Funds provide a tremendous value proposition for investors to own investment-grade bullion in a cost-effective and convenient manner.
Can I invest directly without a broker or financial advisor?
No securities commission, stock exchange or similar governmental or regulatory body outside of Canada has reviewed, passed on or made any determination as to the merits of BMG BullionFund, BMG Gold BullionFund or BMG Silver BullionFund. It is the responsibility of international investors to be knowledgeable about or to be independently advised as to, the applicable securities laws of the international jurisdiction that apply to them.
International Accredited Investors can purchase units of BMG Funds directly through subscription to BMG Marketing Services Inc. Please contact firstname.lastname@example.org for further information.
How do I know that BMG Group Inc. secures socially responsible precious metals?
BMG Group Inc. is an associate member of The London Bullion Market Association (LBMA) and only purchases ‘Good Delivery’ bars for its programs, ensuring all precious metals are SRI.
The LBMA Good Delivery List is now widely recognized as representing the de facto standard for the quality of gold and silver bars, in large part thanks to the stringent criteria for assaying standards and bar quality that an applicant must satisfy in order to be listed. The assaying capabilities of refiners on the Good Delivery List are periodically checked under the LBMA’s Proactive Monitoring program.
Investors can read the LBMA “Responsible Gold Guidance” investment guidelines.
What is the ‘LBMA’?
The London Bullion Market Association (LBMA) is the international trade association that represents the market for gold and silver bullion, which is centred in London, England but has a global client base, including the majority of the central banks that hold gold, private sector investors, mining companies, producers, refiners and fabricators. The current membership stands at 145 member companies across more than 20 countries around the world
What is ‘Responsible Gold Guidance'?
The LBMA has set up a Responsible Gold Guidance for Good Delivery Refiners in order to combat systemic or wide-spread abuses of human rights, to avoid contributing to conflict, to comply with high standards of anti-money laundering, and to combat terrorist financing practices. This Guidance formalizes and consolidates existing high standards of due diligence among all LBMA Good Delivery Refiners.
How is gold superior to currencies or other liquid investments from an environmental, social and governance point of view?
Gold is often touted as a poor investment; advisors and the media alike warn investors to avoid it because they think gold is volatile, or because it doesn’t pay dividends. Treating gold as an investment, however, misses the point. Gold is neither a good investment nor a bad investment; gold is money.
Physical gold bullion or physical paper currencies locked in a vault are not invested; they are simply being stored. Since neither is invested, they don’t earn interest or dividends, but equally, they don’t have any counterparty risk. The major difference between gold and currencies kept in a vault, however, is that gold’s purchasing power increases over time, while paper currencies’ purchasing power decreases over time.
Gold cannot be devalued by government deficit spending and the corresponding increase in the currency supply that is needed to keep the exponential curve moving. Gold is not subject to devaluation by inflation; it is negatively correlated to inflation. In fact, most banks, (especially central banks), view gold as a currency. This is evidenced by the fact that most large banks trade gold as a currency, not as a commodity.
Why do we still value precious metals?
Gold is money, not a commodity as many investors and advisors incorrectly view it. Gold trades on the currency desks of the major banks and brokerage houses, not the commodity desks. It is a wealth-preserving asset, not a wealth-accumulating asset. We buy and hold gold bullion to preserve wealth. It is important to note that, while we may speculate in gold stocks, exchange-traded funds, futures and options to increase wealth, it is gold bullion ownership that best serves the purpose of wealth preservation.
What is meant by the term ‘honest money’?
Gold is often referred to as ‘honest money.’ For money to be considered honest it must be a store of value
and it must provide a firm baseline for measuring the price of goods and services. Gold bullion has both those attributes; fiat currency has neither. Honest money retains its worth by virtue of its intrinsic value. Paper currencies, or digits on a computer screen, have no value in and of themselves. They cannot be used for anything else. The over-printing of bank notes backed only by faith dilutes paper currencies’ worth in a way that can never happen with gold. That is why gold and silver are called honest money.
Money must satisfy several functions. It must be: easily transportable; equally divisible; rare; durable, and a store of value. Gold and silver can never become worthless. Paper currencies come and go, but precious metals remain valuable. Gold, silver, and platinum are not created from thin air; they are not dependent on a fractional reserve system; they are not dependent on the solvency of an institution; they cannot be obtained easily, and they are the ultimate extinguisher of debt.
Have further questions?
Contact us or call us at 1 888-474-1001 (toll free) or 905-474-1001. BMG representatives are available to speak to you from 8:00am to 6:00pm EST, Monday to Friday.