Document ID: SEC-2012-0482-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-03-26T04:00Z

[Federal Register Volume 77, Number 58 (Monday, March 26, 2012)]
[Notices]
[Pages 17539-17548]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7134]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66627; File No. SR-NYSEARCA-2012-18]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To List and Trade Shares of the APMEX 
Physical--1 oz. Gold Redeemable Trust Pursuant to NYSE Arca Equities 
Rule 8.201

March 20, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 5, 2012, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the APMEX 
Physical--1 oz. Gold Redeemable Trust (the ``Trust'') pursuant to NYSE 
Arca Equities Rule 8.201. The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
www.nyse.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade Units (``Units'') of the 
Trust under NYSE Arca Equities Rule 8.201.\4\ Under NYSE Arca Equities 
Rule 8.201, the Exchange may propose to list and/or trade pursuant to 
unlisted trading privileges (``UTP'') ``Commodity-Based Trust 
Shares.''\5\ The Commission has previously approved listing on the 
Exchange under NYSE Arca Equities Rule 8.201 shares of the ETFS Gold 
Trust \6\, as well as the Sprott Physical Gold Trust.\7\ In addition, 
the Commission has approved listing on the Exchange of streetTRACKS 
Gold Trust and iShares COMEX Gold Trust.\8\ Prior to their listing on 
the Exchange, the Commission approved listing of the streetTRACKS Gold 
Trust on the New York Stock Exchange (``NYSE'') and listing of iShares 
COMEX Gold Trust on the American Stock Exchange LLC.\9\
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    \4\ See the Registration Statement for the Trust on Form F-1, 
filed with the Commission on December 23, 2011 (No. 333-178745) (as 
amended, the ``Registration Statement''). The descriptions of the 
Trust, the Units and the gold market contained herein are based, in 
part, on the Registration Statement.
    \5\ Commodity-Based Trust Shares are securities issued by a 
trust that represent investors' discrete identifiable and undivided 
beneficial ownership interest in the commodities deposited into the 
Trust.
    \6\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74 
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
    \7\ Securities Exchange Act Release No. 61496 (February 4, 
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
    \8\ See Securities Exchange Act Release Nos. 56224 (August 8, 
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76) 
(approving listing on the Exchange of the streetTRACKS Gold Trust); 
56041 (July 11, 2007), 72 FR 39114 (July 17, 2007) (SR-NYSEArca-
2007-43) (order approving listing on the Exchange of iShares COMEX 
Gold Trust).
    \9\ See Securities Exchange Act Release Nos. 50603 (October 28, 
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order 
approving listing of streetTRACKS Gold Trust on NYSE); 51058 
(January 19, 2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38) 
(order approving listing of iShares COMEX Gold Trust on the American 
Stock Exchange LLC).

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[[Page 17540]]

    APMEX Precious Metals Management Services, Inc. is the manager of 
the Trust (``Manager''),\10\ Computershare Trust Company of Canada is 
the trustee of the Trust (``Trustee''),\11\ and RBC Dexia Investor 
Services (``RBC Dexia'') Trust is the custodian of the Trust 
(``Custodian'') \12\ and the valuation agent for the Trust (``Valuation 
Agent'').\13\
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    \10\ The Manager is a Delaware corporation and is a wholly-owned 
subsidiary of Apmex, Inc. (formerly known as American Precious 
Metals Exchange, Inc.) (the ``parent company''). The parent company 
is an Internet-based company that sells a selection of precious 
metals in bar and coin form to the public, primarily in the United 
States. The Manager is responsible for the day-to-day activities and 
administration of the Trust. The Manager manages, or causes to be 
managed at the expense of the Trust, the Trust pursuant to the 
management agreement, as authorized under the amended and restated 
trust agreement. Additional details regarding the Manager are set 
forth in the Registration Statement.
    \11\ The Trustee is a trust company existing under the federal 
laws of Canada. The Trustee holds title to the Trust's assets and 
has exclusive authority over the assets and affairs of the Trust. 
The Trustee has a fiduciary responsibility to act in the best 
interest of the unitholders. Additional details regarding the 
Trustee are set forth in the Registration Statement.
    \12\ RBC Dexia is a trust company existing under the federal 
laws of Canada, and is a jointly-owned subsidiary of the Royal Bank 
of Canada and Dexia N.V./S.A. RBC Dexia is affiliated with a broker-
dealer. RBC Dexia has represented to the Exchange that it has put in 
place and will maintain the appropriate information barriers and 
controls between itself and the broker dealer affiliate so that the 
broker dealer affiliate will not have access to information 
concerning the composition and/or changes to the Trust's holdings 
that are not available on the Trust's Web site. The Custodian will 
act as custodian for the assets that the Trust owns and will appoint 
a gold custodian as sub-custodian to hold the 1 oz. gold coins, as 
described below. The Custodian is responsible for the property of 
the Trust (cash, cash equivalents (as described below) and gold 
coins) that the Custodian, its affiliates or appointed sub-
custodians directly hold. The Bank of Nova Scotia, a sub-custodian 
of RBC Dexia, will act as gold custodian for the 1 oz. gold coins 
that the Trust owns. The Custodian is responsible for and bears the 
risk of loss of, and damage to, the Trust's 1 oz. gold coins that it 
deposits with the Bank of Nova Scotia (the ``Gold Custodian''), 
regardless of whether they are actually in possession of the gold 
custodian, subject to certain limitations based on events beyond the 
control of the Custodian. The Manager, with the consent of the 
Trustee, may determine to change the custodial arrangements of the 
Trust. The Trust represents that the agreement with the Custodian 
does not limit the options the Custodian may use for storage, 
although the Custodian must comply with the law and regulations as 
promulgated by the federal government of Canada and the Province of 
Ontario. Currently, the Custodian has decided to store the gold with 
the Bank of Nova Scotia which bank attests that it meets all 
applicable legal and regulatory requirements. Additional details 
regarding the Custodian and the gold custodian are set forth in the 
Registration Statement.
    \13\ The Trust's Valuation Agent will calculate the value of the 
net assets of the Trust on a daily basis and reconciles all 
purchases and redemptions of Units to determine the net asset value 
(``NAV''), as described further below.
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    According to the Registration Statement, the investment objective 
of the Trust is to invest and hold substantially all of its assets in 1 
oz. gold coins. The assets of the Trust will consist of 1 oz. American 
Gold Eagle bullion coins and 1 oz. Canadian Gold Maple Leaf bullion 
coins, although the Trust is also permitted to purchase 1 oz. gold 
bullion bars and rounds. The Trust seeks to provide a secure, 
convenient and exchange-traded investment alternative for investors 
interested in holding 1 oz. gold coins. The Trust believes that 
investing in 1 oz. gold coins has several advantages over investing in 
bullion, including (i) 1 oz. gold coins contain a known quantity of 
gold that is guaranteed by the government issuing them, whereas gold 
bullion has no such guarantee; (ii) it is a crime to tamper with 1 oz. 
gold coins, so those receiving them have more confidence as to the 
amount of gold the coin contains; (iii) because the amount of gold 
contained in each unit is small (1 oz.), redemptions for the underlying 
precious metal can be done at lower amounts than similar investments in 
gold bullion; and (iv) if an investor chooses to redeem the investor's 
interests in the Trust, the investor would receive 1 oz. gold coins, 
the value of which is known since the precious metals it contains are 
of a known and fixed quantity, as opposed to bullion, the value of 
which would have to be re-determined for the benefit of a transferee 
when the investor wanted to transfer it. The Trust does not anticipate 
making regular cash distributions to unitholders. The Trust is neither 
an investment company registered under the Investment Company Act of 
1940 \14\ nor a commodity pool for purposes of the Commodity Exchange 
Act.\15\
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    \14\ 15 U.S.C. 80a-1.
    \15\ 17 U.S.C. 1 [sic].
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    The Exchange represents that the Units satisfy the requirements of 
NYSE Arca Equities Rule 8.201 and thereby qualify for listing on the 
Exchange.\16\
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    \16\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Act, the Trust relies on the exemption contained in 
Rule 10A-3(c)(7).
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Operation of the Gold Bullion Market

    According to the Registration Statement, the global gold market is 
influenced by several industries, organizations and activities which 
may be categorized as banking, governmental, mining, manufacturing and 
investment. For example:
     Multi-national bullion banks provide a variety of bullion-
related products and services to the global gold market, including 
physical purchases and sales, gold leasing, hedging and gold deposits.
     Governments, through central bank activities for each 
nation, buy, sell and hold gold reserves.
     Mining companies produce gold directly and combine with 
other companies that produce gold as a by-product and companies that 
are scrap merchants and gold recyclers to provide a supply of gold.
     Manufacturers which use gold in the process of making or 
constructing a final product, including products in the industrial 
community, electronic products, dental applications and jewelry, 
combine to provide demand for gold.
     Investment activities of individuals, corporations, pooled 
accounts, exchange traded funds and other investment oriented trading 
activity combine to provide demand for gold.
    Gold can be purchased in a physical form in almost every country in 
the world. The most popular forms of gold ownership include coins, most 
commonly in one ounce gold coins of a known fineness, struck by 
sovereign governments including the United States, Canada, South 
Africa, Australia, Austria and others, along with bars and rounds also 
commonly containing one ounce or less in a known or expressed fineness, 
provided by major gold refiners including Johnson & Matthey, Produits 
Artistiques M[eacute]taux Pr[eacute]cieux, Credit Suisse and others. 
Physical gold can be purchased in the United States through most 
precious metal or coin dealers and over the Internet, while in Europe 
and other parts of the world, purchases can also be made through banks 
and other financial institutions.
    Physical gold is paid at the time of delivery and generally the 
prices track the world price of gold directly plus a small premium for 
manufacturing and distribution costs. The owner of the gold has a 
responsibility to store and insure the gold, but that is at the 
discretion of the owner. Private depositories and bank safe deposit 
vaults are available for annual fees.
    Sources of gold supply include both mine production and recycling 
of existing previously mined gold. Gold mine production constitutes the 
largest portion of gold supplied into the market annually. Gold scrap, 
from jewelry and other manufactured products, is the second largest 
source of annual gold supply. Although many central banks have recently 
been purchasing gold rather than selling, central bank sales have 
historically accounted for a significant supply of gold coming into the 
marketplace.

[[Page 17541]]

    Mine production includes gold produced from a primary or a 
secondary deposit. For the five years ended December 31, 2010, gold 
from net mining activity (gold from mining producers less hedging by 
producers) has been relatively stable at a level of between 
approximately 2,031 metric tons and approximately 2,686 metric tons per 
year. Notwithstanding this steady production, this supply represents 
only approximately 58% to 63% of the total annual demand for gold. 
During the seven quarters ended September 30, 2011, with rising prices 
and, accordingly, greater incentive for mining, net mining activity is 
providing from 57% to 75% of the total demand for gold.
    According to the Registration Statement, central banks, as well as 
other governmental agencies, have historically retained gold as a 
strategic asset. However, since 1989, the governmental segment has been 
a net seller of gold to the private sector until the fourth quarter of 
2010. For the five years ended December 31, 2010, central bank sales of 
gold have declined from approximately 370 metric tons in 2006, or 
approximately 10% of total annual supply of 3,574 metric tons, turning 
to negative supply, or otherwise a factor in demand, to approximately 
77 metric tons in 2010, a significant turnaround from a source of 
supply to a source of demand. In the seven quarters ended September 30, 
2011, central bank sales have provided a source of demand, not a source 
of supply, except for the fourth quarter of 2010, ranging from the 
provision of demand of as much as approximately 148 metric tons in the 
third quarter of 2011, to a swing as a source of supply of 
approximately 18 metric tons in the fourth quarter of 2010. Overall for 
2010, central banks provided a net of approximately 77 metric tons of 
demand, not supply, in the global market.
    According to the Registration Statement, as a result of the swing 
from net seller in 2006 to a net buyer in 2010, these central banks 
have ceased providing a supply of gold to the market and have become a 
consumer of gold in the market. This dramatic shift may have 
significant impact on supply and demand relationships in the future.
    Industrial gold demand includes production for electronic devices, 
dental applications and other uses. Gold has manufacturing properties 
that include malleability, resistance to corrosion and conductivity 
that make the metal ideal for a variety of electronic components such 
as smartphones and notebooks and in emerging technology such as 
nanoparticles. During the five years ended December 31, 2010, 
industrial demand has been as high as 466 metric tons per year to as 
low as 410 metric tons per year and has represented as much as 13% of 
total annual demand and as low as 11% of total annual demand. For the 
seven quarters ended September 30, 2011, industrial demand has 
increased from 114 metric tons in the first quarter of 2010 to 120 
metric tons in the third quarter of 2011, with a high of 120 metric 
tons in the third quarters of 2010 and 2011.
    Gold jewelry continues to be the primary source of gold demand 
worldwide, although in 2009, institutional demand exceeded jewelry 
demand. India is the most significant market for gold jewelry demand 
followed by China, the United States and Saudi Arabia. For the five 
years ended December 31, 2010, jewelry demand has been between 50% and 
69% of the total annual demand. For the seven quarters ended September 
30, 2011, jewelry demand has varied from 418 metric tons in the second 
quarter of 2010 to 558 metric tons in the first quarter of 2011. As a 
portion of total demand during the seven quarters ended September 30, 
2011, jewelry has represented between 38% and 60% of total demand.
    Retail and institutional investment demand includes government gold 
coin production, medals and other coin and bar production, gold bar 
hoarding, increases in gold on deposit for exchange traded funds and 
other gold fund investments and other physical investment demand. For 
the five years ended December 31, 2010, investment demand has grown 
from 830 metric tons in 2006 to 1,518 metric tons in 2010. During the 
seven quarters ended September 30, 2011, investment demand has 
fluctuated from 248 metric tons in the first quarter of 2010 to a high 
of 575 metric tons in the second quarter of 2010. For the seven 
quarters ended September 30, 2011, investment demand has provided from 
27% to 52% of total demand.
    Gold is traded around the world daily on a 24 hour basis. Gold can 
be owned directly or indirectly in several ways and traded in several 
different markets depending on the form of gold ownership or rights to 
own the underlying gold.

Determining Value of Gold Coins

    According to the Registration Statement, the Valuation Agent will 
determine the fair market value of the 1 oz. American Gold Eagle 
bullion coins \17\ and the 1 oz. Canadian Gold Maple Leaf bullion coins 
\18\ by using the closing price information provided by Bloomberg 
Finance LP. The closing price of each coin is separately recognized by 
Bloomberg as COINGEAG and COINGCML, respectively, determined by the 
mid-point between the high bid and low ask for that coin on the 
applicable date.\19\ Bloomberg's quotations are based on information 
provided by the Certified Coin Exchange. The Certified Coin Exchange is 
an electronic exchange for coins that obtains bid and ask information 
from its member dealers, of which there are more than 500, that post 
over 100,000 bid and ask prices on a wide variety of coins, including 
the 1 oz. American Gold Eagle and the 1 oz. Canadian Gold Maple Leaf, 
at a given time. To the extent that the Trust holds 1 oz. gold bars or 
rounds, the fair market value is equal to the market value of 1 oz. of 
gold in the current market, which the Trust will obtain from Bloomberg.
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    \17\ The American Eagle Gold Bullion Coin was authorized by the 
Bullion Coin Act of 1985 and recorded under United States Code, 
Title 31, Subtitle IV, Chapter 51, Subchapter II, Section 5112.
    \18\ The Canadian Gold Maple Leaf is the official gold bullion 
coin of Canada and is struck by the Royal Canadian Mint and enabled 
under the Royal Canadian Mint Act, Revised Statutes of Canada 1985, 
c.-R-9, as amended. The objectives of the Royal Canadian Mint are 
``to mint coins in anticipation of profit and to carry out other 
related activities.'' The Royal Canadian Mint has all the powers of 
a natural person. The Royal Canadian Mint is a Schedule III-Part II 
for profit Crown corporation under the Financial Administration Act 
and operates under the general direction of its board of directors. 
The Royal Canadian Mint reports to the Canadian Parliament through 
the Minister of Transport, Infrastructure and Communities.
    \19\ Information relating to gold coin prices is updated by 
Bloomberg each business day as of 4:30 p.m. Eastern time.
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    1 oz. gold coins are manufactured and distributed by the United 
States Mint and the Royal Canadian Mint.\20\ Both of these mints offer 
the 1 oz. gold coins at a price equal to the value of 1 oz. of gold 
plus a premium. The premium is a percentage of the value of the then 
applicable price of 1 oz. of gold, and such amount is intended to cover 
the cost of manufacturing and certain other distribution costs. This 
premium is set by the respective mints and generally does not change 
substantially, although

[[Page 17542]]

the price of the 1 oz. of gold changes with market conditions.
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    \20\ According to the Registration Statement, the American Gold 
Eagle and the Canadian Gold Maple Leaf, are two of the most 
recognized forms of gold in the world. These 1 oz. gold coins are 
struck by the United States and Canadian Governments so that there 
are a sufficient number of coins available to meet the demand for 
them, and are backed by the full faith and credit of the respective 
countries as to the quality of the coins. These 1 oz. gold coins are 
primarily distributed through qualifying financial institutions and 
large bullion dealers that meet the criteria of the respective 
issuing countries.
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    Each of the mints offers the 1 oz. gold coins to a group of 
authorized distributors, which are approved by the respective mint.\21\ 
Each of the mints has established a set of criteria that must be met by 
prospective and current authorized distributors. The authorized 
distributors for the United States Mint include eight companies, of 
which three are publicly traded banks, four are units of publicly 
traded companies, and one is a private company.\22\ There are six 
authorized distributors for the Royal Canadian Mint, of which one is a 
unit of a publicly traded bank, three are units of publicly traded 
companies and two are private companies.\23\
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    \21\ The Trust deems authorized distributors to be those 
entities that have met the criteria established by the U.S. Mint and 
the Royal Canadian Mint, respectively, in their sole discretion, for 
the purposes of recognition as a buyer directly from such mint in 
order to distribute the products of the respective mint into the 
marketplace. These criteria include financial experience, operations 
and other criteria, that would be satisfactory to such mint.
    \22\ Authorized distributors of U.S. gold bullion coins are 
required to meet specified qualification criteria relating to 
experience as market-maker in gold coins, tangible net worth and 
audit by an independent certified public accounting firm. See 
``Procedures to Qualify for Bulk Purchase of Gold Bullion Coins'', 
available at http://www.usmint.gov/consumer/GoldAPRequirements.pdf. 
The authorized distributors of American Gold Eagles for the United 
States Mint are published and known to be as follows: A-Mark 
Precious Metals, Scotia Mocatta, MTB, Prudential Securities, Coins 
'N' Things, Commerzbank International, Deutsche Bank, and Tanaka 
Kinkinzoku.
    \23\ Although the Royal Canadian Mint does not publicize the 
requirements to become an authorized distributor or the authorized 
distributors themselves, the Manager believes that the following 
entities are authorized distributors of the Canadian Maple Leaf for 
the mint: A-Mark Precious Metals, Scotia Mocatta, MTB, Prudential 
Securities, Coins 'N' Things, and Dillon Gage.
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    Based on the supply chain from the respective mints, the authorized 
distributors set their prices based on current market conditions, 
creating a spread between the purchase price of the 1 oz. gold coins 
from the mints and the selling price of such distributors with such 
selling price based on current market demand. Since the market value of 
the 1 oz. gold coins are primarily based on the price of 1 oz. of gold, 
and, further, since all of the coins from the respective mints are 
identical, the selling price of all the authorized distributors is 
substantially similar in what is a competitive commodity market. 
Generally, these authorized distributors (or ``primary dealers'') offer 
the 1 oz. gold coins to wholesalers and to larger retail sellers.
    The Trust will hold substantially all of its assets in the 1 oz. 
American Gold Eagle bullion coin and the 1 oz. Canadian Gold Maple Leaf 
bullion coin.\24\
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    \24\ According to the Registration Statement, the American Gold 
Eagle coin contains one troy ounce of gold and, along with other 
alloys, uses the durable 22-karat standard (0.9167 fine gold or 
similar) for gold coinage. Each coin contains the stated amount of 
pure gold, plus small amounts of silver and copper alloys, added for 
increased hardness and durability. They are struck to the U.S. 
Mint's exacting standards for quality. Each one troy ounce coin must 
contain one troy ounce of pure gold, must weigh 1.0909 troy ounces, 
must have a diameter of 32.70 millimeters and must be 2.87 
millimeters thick. The American Gold Eagle is required, by law, to 
be struck from newly mined sources of gold in the United States. The 
Canadian Gold Maple Leaf coin contains one troy ounce of gold with a 
24-karat fineness of 0.9999. The coins are guaranteed for their 
weight, purity and fineness by the Government of Canada. The coin 
has a diameter of 30 millimeters and is 2.8 millimeters thick.
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    The United States Mint charges the authorized purchasers a premium 
of 3% over the price of gold on the 1 oz American Gold Eagle. The Royal 
Canadian Mint does not disclose or publish the premium for the 1 oz. 
Gold Maple Leaf.\25\
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    \25\ Neither the United States Mint nor the Royal Canadian Mint 
sells the American Gold Eagle or the Canadian Maple Leaf directly to 
the public. Although the Web sites of the respective mints (the 
United States Mint at http://www.usmint.gov/mint_programs/american_eagles/index.cfm?Action=american_eagle_gold and the 
Royal Canadian Mint at http://www.mint.ca/store/mint/about-the-mint/bullion-1300002) discuss the 1 oz. gold coins manufactured by the 
respective mints, there is no opportunity to purchase directly from 
the mints. The United States Mint offers a listing of retailers by 
state and the Royal Canadian Mint offers a form to complete in order 
to identify a retailer. Neither of the mints offers a list of 
companies that are authorized purchasers from the respective mint 
and neither of the mints offers any explanation for premiums or 
pricing.
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    Each of the mints has established a set of criteria that must be 
met by prospective and current authorized distributors. The United 
States Mint publishes the application to become an authorized purchaser 
online at http://www.usmint.gov/consumer/index.cfm?action=AmericanEagles, while the Royal Canadian Mint does not 
publish any of its criteria.
    According to the Registration Statement, the correlation of the 
market value of the 1 oz. American Gold Eagle coin to the gold spot, as 
reported by Bloomberg Finance L.P., for the period from January 2009 to 
August 2011 as of the last trading day each month, is 0.978. The 
correlation of the market value of the 1 oz. Canadian Gold Maple Leaf 
coin to the gold spot, as reported by Bloomberg Finance L.P., for the 
period from January 2009 to August 2011 as of the last trading day each 
month, is 0.976. The data provided by Bloomberg Finance L.P. for the 
value of the 1 oz. American Gold Eagle Coin and the 1 oz. Canadian Gold 
Maple Leaf Coin is the same data that will be used by the Trust to 
calculate the NAV.

Commodity Exchanges

    There are several commodity exchanges around the world that provide 
the ability to purchase a contract for delivery of a fixed amount of 
gold in a specified purity, or fineness, with delivery at a specific 
time in the future. Commodity exchange contracts can be satisfied 
either financially or by physical delivery. The current delivery month 
contract trades at a price that approximates the current value of the 
underlying amount of gold while future delivery months trade at a 
premium to the current delivery month. Generally, the longer the time 
until the contract delivery month, the higher the premium per ounce of 
gold the contract trades relative to the current delivery month. 
Because the contracts expire and must be satisfied either financially 
or by physical delivery, there is some action required by the contract 
owner every month for the current contract.

Gold Company Stocks

    Stock exchanges around the world trade the equities of gold mining 
companies. These publicly traded gold mining companies may or may not 
have profitable operations and may or may not have ownership or rights 
to gold mines. The gold mines in which the gold mining companies have 
exploration rights may or may not be producing gold. The public 
disclosure of the details and explanations of the operations of the 
gold mining companies that trade on the exchanges vary in each country 
and in each trading exchange.

Gold Derivatives

    There are several worldwide exchanges that trade gold derivatives. 
Gold derivatives include options to purchase or sell gold, forwards and 
other forms of trading rights to buy or sell gold. Such gold 
derivatives usually carry a fixed price of gold at which the gold must 
be bought or sold and have a tenor, or fixed timeframe when the right 
to buy or sell expires. Settlement of the derivative trade is most 
often completed financially and no physical gold is generally ever 
bought, sold or delivered. The owner of a derivative holds a right to 
buy or sell gold and not the physical gold and prices at which these 
derivatives trade are not directly related to the price of gold, but 
trade at prices that include the price of gold, the premium of the 
option, the remaining time before expiration of the option and other 
factors. Gold futures are traded on the COMEX, an affiliate of the 
Chicago

[[Page 17543]]

Mercantile Exchange, Inc., and the Tokyo Commodity Exchange.\26\
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    \26\ For additional information regarding the gold bullion 
market, gold futures exchanges, and regulation of the global gold 
market, see Securities Exchange Act Release No. 59895 (May 8, 2009), 
74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40) (order approving 
Exchange listing and trading of the ETFS Gold Trust).
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Gold Funds

    There are several gold funds operating around the world with the 
majority of the funds traded on public exchanges in the form of open or 
closed end funds, or alternatively, in exchange traded funds. These 
publicly traded funds are a form of asset backed securities where the 
owner of the security holds an undivided interest in the pool of gold 
that the public fund holds. Generally, the public funds hold gold in 
safekeeping, and the value of the securities is directly related to the 
value of the gold that the public fund holds. However, there can be 
some trading premium or discount to the value of the underlying gold 
based on current market conditions, the need for liquidity by the 
owners of the public funds, temporary imbalances of buy or sell orders 
for the securities, tax treatments of the public funds, or other 
factors. Generally, the interest in the public funds is bought or sold 
through brokerage firms with official access to the exchanges on which 
the securities of the public funds trade.

Operation of the Trust

    According to the Registration Statement, the Trust will not hold or 
trade in commodity futures contracts regulated by the Commodity 
Exchange Act, as administered by the U.S. Commodity Futures Trading 
Commission (``CFTC''). According to the Registration Statement, the 
Trust is not a commodity pool for purposes of the Commodity Exchange 
Act,\27\ and none of the Manager, the Trustee or the underwriters is 
subject to CFTC regulation as a commodity pool operator or a commodity 
trading advisor in connection with the Units.
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    \27\ 7 U.S.C. 1 et seq.
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    The Trust intends to invest in long-term holdings of 1 oz. gold 
coins but intends to hold highly liquid investments (consisting of 
short term certificates of deposit or any U.S. Government Security) or 
cash [sic] an amount equal to approximately 3% of its total net assets 
generally to pay expenses and cash redemptions. The Trust does not 
intend to speculate in gold. The Trust may be required to sell some of 
its 1 oz. gold coins from time to time in order to replenish the amount 
held in cash. The Trust is authorized to issue an unlimited number of 
Units.
    Except with respect to cash and highly liquid investments that the 
Trust will hold to pay expenses and anticipated redemptions, the Trust 
expects to own only 1 oz. gold coins. While the Trust, pursuant to its 
investment guidelines (``Investment Guidelines''), will be permitted to 
invest up to 20% of its assets in securities other than 1 oz. gold 
coins, the Manager intends to invest and hold approximately 97% of the 
total net assets of the Trust in 1 oz. gold coins.\28\
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    \28\ The Trust's Investment Guidelines provide that the Trust 
will invest in and hold a minimum of 80% of the total net assets of 
the Trust in 1 oz. gold coins and hold no more than 20% of the total 
net assets of the Trust in cash (such as interest-bearing accounts 
and short-term certificates of deposit) or any U.S. Government 
Security, as defined below (except during the 90-day period 
following the closing of the Trust's initial public offering or 
additional offerings or prior to the distribution of assets of the 
Trust, at which times the Trust may hold more than 20% of the total 
net assets of the Trust in cash (such as interest-bearing accounts 
and short-term certificates of deposit) and U.S. Government 
Securities). U.S. Government Security means any direct obligations 
of or obligations guaranteed as to principal or interest by the 
United States, or securities issued or guaranteed by corporations in 
which the United States has a direct or indirect interest which 
shall have been designated by the Secretary of the Treasury, 
pursuant to section 3(a)(12) of the Act, as exempted securities for 
the purposes of the Exchange Act.
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    The Manager will not buy and sell 1 oz. gold coins for the Trust 
through its current parent company, APMEX Precious Metals Exchange, 
Inc., of which the Manager's officers and directors are officers, or 
its affiliates.
    To purchase all of the 1 oz. gold coins pursuant to the Trust's 
investment guidelines using the initial public offering proceeds, the 
Manager will negotiate on behalf of the Trust for multiple transactions 
with certain authorized distributors; all of such distributors are 
independent of the Manager and any affiliate of the parent company. 
These negotiations and related transactions will include the pricing of 
the 1 oz. gold coins, the proposed terms of payment and certain 
delivery requirements in each transaction for the 1 oz. gold coins to 
be received at the gold custodian.\29\ For each transaction, the 
Manager expects that the price per coin for the specified number of 
coins in the order will be quoted and offered by the distributors at a 
fixed amount over the price of gold per ounce on a date certain in the 
future as published by London Gold Market Fixing, or the London PM Fix, 
although the Manager may use other processes to establish a fair, 
competitive market price and related terms.
---------------------------------------------------------------------------

    \29\ This procedure will not apply continually and will apply 
only with respect to the initial public offering, and if the Trust 
engages in other public offerings for the purchase of gold using the 
initial public offering proceeds.
---------------------------------------------------------------------------

    The process of determining the worldwide price of gold occurs twice 
daily in London, once in the morning and once in the afternoon, by a 
committee of five internationally recognized bullion dealers, all of 
which are members of the London Bullion Market Association. Once the 
Manager identifies an offer of price and terms as acceptable for a 
transaction, it will prepare a purchase order for the transaction that 
specifies the Trust as the buyer and the seller as the identified 
distributor and will set forth in reasonable detail the price and 
terms. The Manager will sign the purchase order on behalf of the Trust 
and deliver it to the selling distributor. In accordance with the terms 
of the purchase order, funds will be delivered to the selling 
distributor directly from the Trust. As the physical delivery of the 1 
oz. gold coins is completed at the gold custodian, a representative of 
the Manager will be present. At delivery, the Manager will inspect the 
1 oz. gold coins and complete a random review of the count and 
authenticity of the gold content. Once the Manager is satisfied with 
the completeness and accuracy of the delivery of the 1 oz. gold coins, 
the gold custodian will put the 1 oz. gold coins in storage and provide 
a written report to the Custodian of the details of such receipt.

Secondary Market Trading

    The Units may trade in the secondary market on the Exchange at 
prices that are lower or higher relative to their NAV per Unit. The 
amount of the discount or premium in the trading price relative to the 
NAV may be influenced by non-concurrent trading hours between the 
COMEX, which is the U.S. exchange on which gold for physical delivery 
is traded, and NYSE Arca and the Toronto Stock Exchange (``TSX''). 
While the Units will trade on NYSE Arca and the TSX until 4 p.m. 
Eastern time, liquidity in the global gold market will lessen after the 
close of the COMEX at 1:30 p.m. Eastern time. As a result, during this 
time, trading spreads, and the resulting premium or discount to the NAV 
may widen.

Trust Expenses

    The Trust pays the Manager a monthly management fee. Fees payable 
to the Manager are calculated and accrued daily and will be paid 
monthly in arrears. Except as otherwise described in the Registration 
Statement, the Trust is responsible for all costs and expenses incurred 
in connection with

[[Page 17544]]

the ongoing operation and administration of the Trust including, but 
not limited to: The fees and expenses payable to and incurred by the 
Trustee, the Manager, any investment manager, the Custodian, any sub-
custodians, including the gold custodian, the registrar and transfer 
agent, the Valuation Agent and the independent review committee; 
acquisition, transaction and handling costs for the 1 oz. gold coins 
(other than the redemption expenses); and storage fees for the 1 oz. 
gold coins.

Initial Public Offering and Redemption of Units

    The Trust will offer at a minimum, 1,000,000 Units in its initial 
public offering. Each Unit will represent an equal, undivided ownership 
interest in the net assets of the Trust attributable to the Units. The 
Trust may not issue additional Units following the completion of this 
offering (i) unless the per Unit offering price, after deducting 
underwriting fees, commissions and offering expenses, will not yield 
proceeds less than the NAV per Unit, as determined on the business day 
prior to the pricing of the units to be sold in the offering, or (ii) 
except by way of Unit distribution in connection with an income 
distribution.
    Unitholders may redeem their Units on a weekly basis, as described 
below.

Redemption of Units for 1 oz. Gold Coins

    Subject to the terms of the amended and restated trust agreement, a 
unitholder may redeem Units at its option for 1 oz. gold coins on each 
Thursday. Unitholders who redeem their Units for 1 oz. gold coins are 
entitled to receive a redemption price equal to 100% of the aggregate 
NAV of the redeemed Units determined at 4 p.m., Eastern time, on the 
Thursday on which NYSE Arca and/or the TSX is open for trading for the 
week in respect of which the redemption request is processed, or the 
weekly redemption date and time, less the redemption expenses, or the 
gold redemption amount. Such redemption requests must be for a minimum 
redemption amount of at least $10,000 (the ``gold redemption 
minimum'').
    A unitholder that owns a sufficient number of Units (a number of 
Units equal to the gold redemption minimum) who desires to exercise 
his, her or its redemption privileges for 1 oz. gold coins must do so 
by instructing the unitholder's broker, who must be a direct or 
indirect participant of Depository Trust Company in the United States 
(``DTC''), or CDS Clearing and Depository Services, Inc. in Canada 
(``CDS''), to deliver to the registrar and transfer agent, on behalf of 
the unitholder a written notice (the ``gold redemption notice'') of the 
unitholder's intention to redeem Units for 1 oz. gold coins. The 
Trust's registrar and transfer agent must receive a gold redemption 
notice no later than 4 p.m., Eastern time, on the third day on which 
NYSE Arca or the TSX is open for trading prior to the weekly redemption 
date and time. The Trust will process any gold redemption notice that 
it receives after that time on the next weekly redemption date, 
following the date on which the unitholder gives timely notice.
    A common carrier will deliver the 1 oz. gold coins to be delivered 
to a unitholder as a result of a redemption of Units, and the shipping 
provider will fully insure the 1 oz. gold coins during transit. The 
Trust will engage the shipping service provider in connection with a 
redemption. The 1 oz. gold coins can be delivered to any physical 
address (subject to approval by the Trust). In the event that a 
redeeming unitholder does not provide an acceptable physical address 
for delivery of its 1 oz. gold coins in its gold redemption notice, 
such unitholder may elect to either have up [sic] its 1 oz. gold coins 
delivered to the Manager for pickup by the unitholder at the office of 
the Manager or redeem its Units for cash as described below. If the 
unitholder requests that the 1 oz. gold coins be delivered to the 
Manager, the risk of loss transfers to the unitholder upon delivery to 
the Manager. Once the Trust places the 1 oz. gold coins representing 
the redeemed Units with the shipping service provider, which will fully 
insure the shipment, the Trust will have completed its responsibilities 
with respect to the redemption and the redeeming unitholder will bear 
the risk of loss of, and damage to, such 1 oz. gold coins and seek any 
redress for any loss or damage from the shipping service provider or 
the insurance provider, as the case may be. The shipping service 
provider will receive 1 oz. gold coins in connection with a redemption 
of Units approximately seven business days after the redemption is 
processed by the registrar and transfer agent.

Redemption of Units for Cash

    According to the Registration Statement, subject to the terms of 
the amended and restated trust agreement, a unitholder may redeem Units 
at its option for cash on a monthly basis. Units redeemed for cash will 
receive a redemption price equal to 95% of the lesser of (i) the 
volume-weighted average trading price of the Units traded on NYSE Arca 
or, if trading has been suspended on NYSE Arca, the trading price of 
the Units traded on the TSX, for the last five days on which the 
respective exchange is open for trading during the month in which the 
redemption request is processed by the registrar and transfer agent, 
and (ii) the NAV of the redeemed Units as of 4 p.m., Eastern time, on 
the last day of the month on which NYSE Arca is open for trading during 
the month in which the redemption request is processed (in each case, 
less any applicable taxes). A redeeming unitholder will receive cash 
redemption proceeds approximately three business days after the end of 
the month in which the redemption notice is processed. The Trust will 
retain the remaining 5% of the value of the Units.
    The Trust's registrar and transfer agent must receive a redemption 
notice no later than 4 p.m., Eastern time, on the 15th day of the month 
in order for the Manager to process such redemption notice that month 
or, if such day is not a business day, then on the immediately 
following day that is a business day. The Manager will process any 
redemption notice to redeem Units for cash that it receives after such 
time in the next month.
    According to the Registration Statement, the Trust may suspend the 
right of unitholders to request a redemption of their Units or postpone 
the date of delivery or payment of the redemption proceeds (whether 1 
oz. gold coins and/or cash, as the case may be) for any period during 
which the Trust determines that conditions exist which render 
impractical the sale of assets of the Trust or which impair the ability 
of the Trust or the Valuation Agent to determine the value of the 
assets of the Trust and the NAV or the redemption amount for the Units. 
Pursuant to Sections 5.7(2) and 5.7(3) of National Instrument 81-102, 
the Trust must apply to the Ontario Securities Commission, the 
securities regulatory authority for the jurisdiction in which the head 
office of the Trustee is located, for approval to suspend redemptions 
and must concurrently file a copy of the application with the 
securities regulatory authority in each of the other Canadian 
jurisdictions in which the Units will be offered. The Trust may suspend 
redemptions only after the application is approved by the Ontario 
Securities Commission and has not been disallowed by any of the other 
relevant Canadian jurisdictions.\30\
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    \30\ Other Canadian securities regulatory authorities which must 
be notified are as follows: British Columbia Securities Commission, 
Alberta Securities Commission, Saskatchewan Securities Commission, 
Manitoba Securities Commission, Autorite des marches financiers, New 
Brunswick Securities Commission, Nova Scotia Securities Commission, 
Securities Commission of Newfoundland and Labrador, and Prince 
Edward Island Securities Office, Office of the Attorney General.

---------------------------------------------------------------------------

[[Page 17545]]

    In the event of any such suspension, the Trust will issue a press 
release, and publicly file such press release with the Commission via 
the Edgar system, with the TSX and with the Canadian securities 
regulatory authorities on SEDAR, announcing the suspension and will 
advise all agents of the Trust, as applicable. The suspension may apply 
to all requests for redemption received prior to the suspension, but as 
for which payment has not been made, as well as to all requests 
received while the suspension is in effect. All unitholders making such 
requests will be advised of the suspension and that the redemption will 
be effected at a price determined on the first valuation date that the 
value of the net assets of the Trust per Unit is calculated following 
the termination of the suspension. All such unitholders will have, and 
will be advised that during such suspension of redemptions that they 
have, the right to withdraw their requests for redemption. The 
suspension will terminate in any event on the first business day on 
which the condition giving rise to the suspension has ceased to exist 
or when the Trust has determined that such condition no longer exists, 
provided that no other condition under which a suspension is authorized 
then exists, at which time the Trust will issue a press release 
announcing the termination of the suspension and will advise all agents 
of the Trust, as applicable. Subject to applicable Canadian and U.S. 
securities laws, any declaration of suspension made by the Trust will 
be conclusive.
    During any period in which the right of unitholders to request a 
redemption of their Units for 1 oz. gold coins and/or cash is 
suspended, the Trust will direct the Trust's Valuation Agent to suspend 
the calculation of the value of the net assets of the Trust and the 
NAV. During any such period of suspension, the Trust will not issue or 
redeem any Units.
    Termination Events
    The Trust does not have a fixed termination date but will dissolve 
and be subsequently terminated in the event that:
     There are no Units outstanding;
     The Trustee resigns or is removed and no successor trustee 
is appointed within the time limit prescribed in the amended and 
restated trust agreement;
     The Manager resigns and no successor manager is appointed 
and approved by unitholders within the time limit prescribed in the 
amended and restated trust agreement;
     The Manager is, in the opinion of the Trustee, in material 
default of its obligations under the amended and restated trust 
agreement and such default continues for 120 days from the date that 
the Manager receives notice of such default from the Trustee and no 
successor manager has been appointed by the unitholders;
     The Manager has been declared bankrupt or insolvent or has 
entered into liquidation or winding-up, whether compulsory or voluntary 
(and not merely a voluntary liquidation for the purposes of 
amalgamation or reconstruction), and no successor manager has been 
appointed by the unitholders within 90 days from such date;
     The Manager makes a general assignment for the benefit of 
its creditors or otherwise acknowledges its insolvency, and no 
successor manager has been appointed by the unitholders within 90 days 
of such date; or
     The assets of the Manager have become subject to seizure 
or confiscation by any public governmental authority, and no successor 
manager has been appointed by the unitholders within 90 days from such 
date.
    In addition, the Trustee may at any time terminate and dissolve the 
Trust if, in the opinion of the Trustee, after consulting with the 
Manager and the independent review committee, the value of the net 
assets of the Trust has been reduced such that it is no longer 
economically feasible to continue the Trust and would be in the best 
interests of the unitholders to terminate the Trust, by giving each 
holder of Units at the time at least 90 days' notice. To the extent 
such termination in the discretion of the Manager may involve a matter 
that would be a ``conflict of interest matter'' as set forth in 
applicable Canadian laws, the Manager will refer the matter to the 
independent review committee established by the Manager for its 
recommendation. In connection with the termination of the Trust, the 
Trust will, to the extent possible, convert its assets to cash and, 
after paying or making adequate provision for all of the Trust's 
liabilities and expenses, distribute the net assets of the Trust to 
unitholders, on a pro rata basis, as soon as practicable after the 
termination date.

Valuation of Gold and Definition of NAV

    The Valuation Agent will determine the value of the net assets of 
the Trust and the NAV on each business day, unless the Trust determines 
that its assets cannot be valued as frequently as a result of the 
occurrence of a force majeure event, such as a war, earthquake, 
hurricane, civil disturbance or terrorist act. The value of the net 
assets of the Trust as of the valuation time on each business day will 
be the amount obtained by deducting from the aggregate fair market 
value of the assets of the Trust as of such date an amount equal to the 
value of the liabilities of the Trust (excluding all liabilities 
represented by outstanding Units, if any) as of such date. The NAV will 
be determined by dividing the value of the net assets of the Trust on a 
date by the total number of Units then outstanding on such date. 
Registration or transfers of the Units may be made through the book-
based system of CDS and/or DTC, each of which hold the Units on behalf 
of its participants (i.e., brokers), which in turn may hold the Units 
on behalf of their customers.

Intraday Indicative Value

    The Trust Web site will provide an intraday indicative value 
(``IIV'') per share for the Units, as calculated by a third party 
financial data provider during the Exchange's Core Trading Session 
(9:30 a.m. to 4 p.m. Eastern time).\31\ The IIV will be calculated by:
---------------------------------------------------------------------------

    \31\ The IIV on a per Unit basis disseminated during the Core 
Trading Session should not be viewed as a real-time update of the 
NAV, which will be calculated once a day.
---------------------------------------------------------------------------

    1. Subtracting the closing spot price of gold for the prior 
business day from the current applicable spot price of gold (the 
``Spread'');
    2. Multiplying the Spread by the aggregate number of the Trust's 1 
oz. gold coins for the prior business day (the ``Adjustment'');
    3. Dividing the Adjustment by the aggregate number of units of the 
Trust outstanding for the prior business day (the ``Per Unit 
Adjustment''); and
    4. Adding the Per Unit Adjustment to the NAV per Unit of the Trust 
for the prior business day.

Availability of Information

    The Web site for the Trust, which the Trust will launch upon the 
closing of the initial public offering, will contain the following 
information, on a per Unit basis, for the Trust:
    (a) The midpoint of the bid-ask price at the close of trading in 
relation to the NAV as of the time the NAV is

[[Page 17546]]

calculated (``Bid/Ask Price''), and a calculation of the premium or 
discount of such price against such NAV; and
    (b) Data in chart format displaying the frequency distribution of 
discounts and premiums of the Bid/Ask Price against the NAV, within 
appropriate ranges, for each of the four previous calendar quarters. 
The Web site for the Trust will also provide the Trust's prospectus, as 
well as the two most recent reports to stockholders.
    The Trust Web site also will provide the last sale price of the 
Units as traded in the U.S. market, as well as a breakdown of the 
holdings of the Trust by coin type.
    Currently, the Consolidated Tape Plan does not provide for 
dissemination of the spot price of a commodity, such as gold, over the 
Consolidated Tape. However, there will be disseminated over the 
Consolidated Tape the last sale price for the Units, as is the case for 
all equity securities traded on the Exchange. In addition, there is a 
considerable amount of gold price and gold market information available 
on public Web sites and through professional and subscription services. 
The IIV relating to the Units will be widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
Core Trading Session.\32\
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    \32\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available IIVs 
published on CTA or other data feeds.
---------------------------------------------------------------------------

    Investors may obtain on a 24-hour basis gold pricing information 
based on the spot price for an ounce of gold from various financial 
information service providers, such as Reuters and Bloomberg. Reuters 
and Bloomberg provide at no charge on their Web sites delayed 
information regarding the spot price of gold and last sale prices of 
gold futures, as well as information about news and developments in the 
gold market. Reuters and Bloomberg also offer a professional service to 
subscribers for a fee that provides information on gold prices directly 
from market participants. An organization named EBS provides an 
electronic trading platform to institutions such as bullion banks and 
dealers for the trading of spot gold, as well as a feed of live 
streaming prices to Reuters and Moneyline Telerate subscribers. Gold 
coin price information is widely available for free from many precious 
metals dealers. For example, it is free at www.APMEX.com with a delay 
of several minutes. Investors also can obtain gold coin pricing 
information on the Certified Coin Exchange Web site at 
www.certifiedcoinexchange.com.
    Complete real-time data for gold futures and options prices traded 
on the COMEX are available by subscription from Reuters and Bloomberg. 
The NYMEX also provides delayed futures and options information on 
current and past trading sessions and market news free of charge on its 
Web site. There are a variety of other public Web sites providing 
information on gold, ranging from those specializing in precious metals 
to sites maintained by major newspapers, such as The Wall Street 
Journal. In addition, the London AM Fix and London PM Fix are publicly 
available at no charge at www.thebulliondesk.com.
    The Trust's daily (or as determined by the Manager in accordance 
with the amended and restated trust agreement) NAV is posted on the 
Trust's Web site as soon as practicable. The Exchange will provide on 
its Web site (www.nyx.com) a link to the Trust's Web site. In addition, 
the Exchange will make available over the Consolidated Tape quotation 
information, trading volume, closing prices and NAV for the Units from 
the previous day.

Criteria for Initial and Continued Listing

    The Trust will be subject to the criteria in NYSE Arca Equities 
Rule 8.201(e) for initial and continued listing of the Units.
    It is anticipated that a minimum of 1,000,000 Units will be 
required to be outstanding at the start of trading. The minimum number 
of Units required to be outstanding is comparable to requirements that 
have been applied to previously listed shares of the Sprott Physical 
Gold Trust.\33\ The Exchange believes that the anticipated minimum 
number of Units outstanding at the start of trading is sufficient to 
provide adequate market liquidity.
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    \33\ See note 7, supra.
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Trading Rules

    The Exchange deems the Units to be equity securities, thus 
rendering trading in the Fund subject to the Exchange's existing rules 
governing the trading of equity securities. Trading in the Units on the 
Exchange will occur in accordance with NYSE Arca Equities Rule 7.34(a). 
The Exchange has appropriate rules to facilitate transactions in the 
Units during all trading sessions. As provided in NYSE Arca Equities 
Rule 7.6, Commentary .03, the minimum price variation (``MPV'') for 
quoting and entry of orders in equity securities traded on the NYSE 
Arca Marketplace is $0.01, with the exception of securities that are 
priced less than $1.00 for which the MPV for order entry is $0.0001.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Units. Trading on the Exchange in the Units may be 
halted because of market conditions or for reasons that, in the view of 
the Exchange, make trading in the Units inadvisable. These may include: 
(1) The extent to which conditions in the underlying gold market have 
caused disruptions and/or lack of trading, or (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present. In addition, trading in Units will be 
subject to trading halts caused by extraordinary market volatility 
pursuant to the Exchange's ``circuit breaker'' rule.\34\ The Exchange 
will halt trading of the Units on the Exchange if trading in the Units 
is halted on TSX and in the event the Trust directs the Trust's 
Valuation Agent to suspend the calculation of the value of the net 
assets of the Trust and the NAV.
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    \34\ See NYSE Arca Equities Rule 7.12.
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Surveillance

    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (including Commodity-Based 
Trust Shares) to monitor trading in the Units. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Units in all trading sessions and to deter and detect violations 
of Exchange rules and applicable federal securities laws.
    NYSE Arca Equities Rule 8.201 sets forth certain restrictions on 
ETP Holders acting as registered Market Makers in the Units to 
facilitate surveillance. Pursuant to NYSE Arca Equities Rule 8.201(g), 
an ETP Holder acting as a registered Market Maker in the Units is 
required to provide the Exchange with information relating to its 
trading in the underlying gold, related futures or options on futures, 
or any other related derivatives. Commentary .04 of NYSE Arca Equities 
Rule 6.3 requires an ETP Holder acting as a registered Market Maker, 
and its affiliates, in the Units to establish, maintain and enforce 
written policies and procedures reasonably designed to prevent the 
misuse of any material nonpublic information with respect to such 
products, any components of the related products, any physical asset or 
commodity underlying the product, applicable currencies, underlying 
indexes, related futures or

[[Page 17547]]

options on futures, and any related derivative instruments (including 
the Units).
    As a general matter, the Exchange has regulatory jurisdiction over 
its ETP Holders and their associated persons, which include any person 
or entity controlling an ETP Holder. A subsidiary or affiliate of an 
ETP Holder that does business only in commodities or futures contracts 
would not be subject to Exchange jurisdiction, but the Exchange could 
obtain information regarding the activities of such subsidiary or 
affiliate through surveillance sharing agreements with regulatory 
organizations of which such subsidiary or affiliate is a member.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations. Also, pursuant to NYSE 
Arca Equities Rule 8.201(g), the Exchange is able to obtain information 
regarding trading in the Units and the underlying gold, gold futures 
contracts, options on gold futures, or any other gold derivative, 
through ETP Holders acting as registered Market Makers, in connection 
with such ETP Holders' proprietary or customer trades through ETP 
Holders which they effect on any relevant market. In addition, the 
Exchange may obtain trading information via the Intermarket 
Surveillance Group (``ISG'') from other exchanges who are members of 
the ISG, including the COMEX.\35\
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    \35\ A list of ISG members is available at www.isgportal.org. 
The Investment Industry Regulatory Organization of Canada is a 
member of ISG.
---------------------------------------------------------------------------

    The Exchange also has a general policy prohibiting the distribution 
of material, non-public information by its employees.

Information Bulletin

    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin of the special characteristics 
and risks associated with trading the Units. Specifically, the 
Information Bulletin will discuss the following: (1) The procedures for 
purchases and redemptions of Units; (2) NYSE Arca Equities Rule 9.2(a), 
which imposes a duty of due diligence on its ETP Holders to learn the 
essential facts relating to every customer prior to trading the Units; 
(3) the requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Units prior to or concurrently with the 
confirmation of a transaction; (4) the possibility that trading spreads 
and the resulting premium or discount on the Units may widen as a 
result of reduced liquidity of gold trading during the Core and Late 
Trading Sessions after the close of the major world gold markets; and 
(5) trading information. For example, the Information Bulletin will 
advise ETP Holders, prior to the commencement of trading, of the 
prospectus delivery requirements applicable to the Trust. The Exchange 
notes that investors purchasing Units directly from the Trust will 
receive a prospectus. ETP Holders purchasing Units from the Trust for 
resale to investors will deliver a prospectus to such investors.
    In addition, the Information Bulletin will reference that the Trust 
is subject to various fees and expenses described in the Registration 
Statement. The Information Bulletin will also reference the fact that 
there is no regulated source of last sale information regarding 
physical gold, that the Commission has no jurisdiction over the trading 
of gold as a physical commodity, and that the CFTC has regulatory 
jurisdiction over the trading of gold futures contracts and options on 
gold futures contracts.
    The Information Bulletin will also discuss any relief, if granted, 
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \36\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
8.201. The Exchange has in place surveillance procedures that are 
adequate to properly monitor trading in the Shares in all trading 
sessions and to deter and detect violations of Exchange rules and 
applicable federal securities laws. The Exchange may obtain information 
via ISG from other exchanges that are members of ISG or with which the 
Exchange has entered into a comprehensive surveillance sharing 
agreement, including COMEX.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that there is a considerable amount of gold price and gold market 
information available on public Web sites and through professional and 
subscription services. Investors may obtain on a 24-hour basis gold 
pricing information based on the spot price for an ounce of gold from 
various financial information service providers. Complete real-time 
data for gold futures and options prices traded on the COMEX are 
available by subscription from Reuters and Bloomberg. In addition, the 
London AM Fix and London PM Fix are publicly available at no charge at 
www.thebulliondesk.com. The Trust's daily (or as determined by the 
Manager in accordance with the amended and restated trust agreement) 
NAV is posted on the Trust's Web site as soon as practicable. The 
market value of each coin is separately recognized by Bloomberg as 
COINGEAG and COINGCML, respectively. Bloomberg's quotations are based 
on information provided by the Certified Coin Exchange. The Trust's Web 
site will provide an IIV per share for the Units, as calculated by a 
third party financial data provider during the Exchange's Core Trading 
Session. The Trust's Web site will also provide the Trust's prospectus, 
as well as the two most recent reports to stockholders. The Exchange 
will provide on its Web site a link to the Trust's Web site. In 
addition, the Exchange will make available over the Consolidated Tape 
quotation information, trading volume, closing prices and NAV for the 
Units from the previous day.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an additional type of exchange-traded product that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace. As noted above, the Exchange has in place surveillance 
procedures relating to trading in the Shares and may obtain information 
via ISG from other exchanges that are members of ISG or with which the 
Exchange has entered into a comprehensive surveillance sharing 
agreement. In addition, as noted above, investors will have ready 
access to information regarding gold pricing and gold futures 
information.

[[Page 17548]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEARCA-2012-18 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2012-18. This 
file number should be included on the subject line if email is used.
    To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEARCA-2012-18, and should be submitted on or before April 16, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-7134 Filed 3-23-12; 8:45 am]
BILLING CODE 8011-01-P