The SPDR Gold Shares (GLD) ETF tracks the price of gold bullion on the OTC market. 1 The trust that sponsors the fund maintains physical assets. The SPDR Gold Shares (GLD) ETF tracks the price of gold bars on the OTC market. Gold is a precious metal commodity and many investors want to keep physical gold as a protection against the general decline in economic conditions and against inflation, while some may use it as a method of diversifying portfolios.
This ETF was designed and intended to allow investors to participate in the gold market without having to accept the actual delivery of gold or face other potential barriers, such as custody or transaction costs. While the fund is designed to try to closely mimic the price of gold, there are also fees associated with investing in such a vehicle. Global gold markets are now “extremely profitable” and are hugely diversified, as the market draws on several sources of demand, not just the demand for speculative investments. Many people don't understand the differences between buying gold, silver, or other physical precious metals and buying paper metal products, such as a gold or silver-based ETF.
These include the trustee's fees and expenses, the custodian's fees and expenses for the custody of the Trust's gold bars, sponsor fees and expenses, certain taxes, marketing agent fees and expenses, marketing agent fees and expenses, printing and mailing costs, legal and auditing fees, registration fees, NYSE Arca listing rates, and other marketing costs and expenses. Regular shareholders are not entitled to reimbursement and gold is not required to be insured by the Trust, which is not responsible for loss, damage, theft or fraud. Owning gold-based ETF stocks such as GLD is not the same as owning physical gold bars that you can touch and feel. Like the gold GLD ETF, if you buy SLV shares, you could benefit from the rise in the price of silver, while you could lose money if silver prices fall.
However, it is important to understand that owning physical gold is not the same as owning shares in a paper gold product or derivative. Right now, one of the main drivers of demand for gold has been the growth of emerging markets, Milling-Stanley, who has been called the godfather of gold analysis, told CNBC's Bob Pisani. Gold futures contracts involve a substantial amount of leverage, which can amplify both gains and losses. This demonstrates the truly multifaceted nature of gold as a strategic investment and as a hedge against broader market risk, Milling-Stanley said.
Investing in gold ETFs is a cost-effective and easy way to expose yourself to gold, and the SPDR Gold Shares (GLD) ETF is one of many ETFs that offer this exposure. In addition to allowing more investors to participate in the gold market, the GLD can also provide a gold investment vehicle that can be used by several funds and pensions that do not have the capacity to invest in physical ingots or physical ingot derivatives.