Before you head to Costco (COST +1.38%) to buy a gold bar, you might want to consider pulling up your brokerage app and investing in the SPDR Gold Shares ETF (GLD -1.72%) instead.
NYSEMKT: GLD
Key Data Points
The GLD ETF is a unique fund that offers investors exposure to the spot price of gold through a physically backed ETF, allowing you to trade it just like a stock -- without dealing with dealer spreads, security concerns, or storage issues.
Here's what you need to know about this very large and popular gold ETF.
What is SPDR Gold Shares ETF (GLD)?
SPDR Gold Shares ETF (GLD) was the first U.S.-listed exchange-traded fund (ETF) backed by a physical asset -- gold. It holds bullion stored in secure vaults with its custodians, HSBC (HSBC +1.03%) and JPMorgan Chase (JPM -1.18%).
As a result, investors can expect this ETF's market price to closely reflect the spot price of gold during trading hours, minus fees, expenses, and trading costs.
Exchange-Traded Fund (ETF)
SPDR Gold Shares ETF (GLD) is technically structured as a grantor trust, a specialized ETF format often used for physical commodities like gold. As of January 2024, this structure has also been adopted by spot Bitcoin ETFs.
How to buy SPDR Gold Shares ETF (GLD)
- Open your brokerage app: Log into your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker "GLD" or the ETF name into the search bar to bring up the ETF's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this fund.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings of SPDR Gold Shares ETF (GLD)
This ETF's sole holding is gold bullion. The physical gold is securely stored with custodians JPMorgan Chase and HSBC in vaults located in London, New York, and Zurich.
To ensure accuracy and transparency, World Gold Trust Services, the sponsor of the trust, oversees the bullion holdings. Independent public accountants and bullion auditors are authorized to conduct examinations. Specifically, Bureau Veritas Commodities UK performs two audits annually -- one scheduled and one random -- to verify the ETF's inventory.
Its gold is primarily held in allocated accounts, meaning the gold bars are specifically identified and segregated in the custodian's vaults, belonging exclusively to the fund's investors.
However, there are exceptions. During ETF creation and redemption processes, or when gold needs to be sold to cover the fund's operational expenses, some holdings may temporarily move to unallocated accounts or be liquidated.
Should I invest in SPDR Gold Shares ETF (GLD)?
If you've determined that your portfolio could benefit from exposure to gold prices but don't want the hassle of physically buying, storing, or securing gold bars, this gold ETF is likely the best option.
It's the largest and longest-running ETF in this segment, offering unparalleled liquidity and a robust track record.
Additionally, because this ETF is highly liquid and features an extensive options chain, it’s a strong choice for traders looking to speculate on the short-term movements in gold prices.
Does SPDR Gold Shares ETF (GLD) pay a dividend?
SPDR Gold Shares ETF (GLD) does not pay a dividend because its underlying asset -- gold bullion -- is not a cash flow–generating investment.
If you're seeking income from gold, you'd need to consider alternatives like gold miner sector ETFs or selling covered call options on SPDR Gold Shares ETF (GLD).
ETF Expense Ratio
Historical performance of SPDR Gold Shares ETF (GLD)
Below, you can see how GLD has performed over various trailing time periods.
Metric | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|
Net Asset Value | 44.89% | 31.26% | 14.73% | 12.68% |
Market Price | 46.25% | 31.97% | 14.95% | 12.77% |
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The bottom line on SPDR Gold Shares ETF (GLD)
This ETF offers a liquid, reputable, and relatively affordable way to trade or invest in gold through your brokerage account. It's an excellent choice for those seeking direct exposure to the price of gold without dealing with the complexities of storage or security.
For cost-conscious investors looking to simply buy and hold gold, its cheaper counterpart, SPDR® Gold MiniShares® Trust, may be a better fit, as it carries a lower expense ratio but lacks an as-active options market.
Keep in mind that gold prices can be highly volatile, and shareholders of this ETF cannot swap their shares for physical gold. That privilege is reserved for institutional authorized participants who facilitate ETF share creation and redemption.
