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A great many investors seem to think the world is going to hell in a handcart, with the Americans at the controls.

How else to explain the enormous appeal of a $460-million gold bullion fund launched by Claymore Investments Inc.? The Claymore Gold Bullion Trust is expected to be launched on the Toronto Stock Exchange today after finding a following with both individual investors and institutions, because it gives a pure play on gold, without exposure to the volatile U.S. dollar.

Claymore has created a security, sold for $10 a unit, that hedges currency exposure back into the Canadian dollar, and managed to sell the product with a relatively low fee. Claymore charges 40 basis points to manage the bullion trust, where most domestic equity mutual fund fees run to more than 200 basis points. Claymore also added a feature that automatically converts the bullion trust into an exchange traded fund or ETF, if units trade at a discount to their net asset value.

GMP Securities led the offering, which comes on the heels of four other Canadian funds that also hold bullion, all of which are pegged to the U.S. dollar.

Gold prices have soared during the downturn, as investors see precious metals as a safeguard against economic turmoil. Gold traded Thursday at $948 (U.S.) an ounce, after changing hands at $660 back in August, 2007, when the credit crisis began.

See Andrew Willis's Streetwise Blog at

© 2007 The Globe and Mail. All rights reserved.

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