[Federal Register Volume 77, Number 58 (Monday, March 26, 2012)]
[Notices]
[Pages 17539-17548]
[FR Doc No: 2012-7134]

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

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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \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).

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

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 80a-1.
    \15\ 17 U.S.C. 1 [sic].
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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.

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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

the price of the 1 oz. of gold changes with market conditions.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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

Mercantile Exchange, Inc., and the Tokyo Commodity Exchange.\26\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \27\ 7 U.S.C. 1 et seq.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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

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\
---------------------------------------------------------------------------

    \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.

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

    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

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \33\ See note 7, supra.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \34\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

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

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\
---------------------------------------------------------------------------

    \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.

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<EMAIL_ADDRESS>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\
---------------------------------------------------------------------------

    \37\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-7134 Filed 3-23-12; 8:45 am]
BILLING CODE 8011-01-P