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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.
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 also a strong choice for traders looking to speculate on the short-term movements in gold prices.
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).
This ETF has an expense ratio of 0.40%, which means for every $10,000 you invest, you’ll pay $40 annually.
This fee isn’t paid upfront -- instead, the fund periodically sells a portion of its underlying gold bullion to cover expenses, slightly reducing its performance over time.
Although 0.40% is reasonable for its category, it is somewhat pricey compared to newer alternatives.
For example, the SPDR Gold MiniShares Trust (NYSEMKT:GLDM) offers the same exposure to gold but has a lower share price and an expense ratio of just 0.10%, making it a cheaper option for cost-conscious investors.
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 | 26.09% | 12.32% | 10.93% | 7.65% |
Market Price | 26.66% | 12.29% | 11.11% | 7.86% |
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.
Before you head to Costco to buy a gold bar, you might want to consider pulling up your brokerage app and investing in the SPDR Gold Shares ETF (NYSEMKT:GLD) instead.
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.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.