Gold has long been seen as an appealing investment option due to its natural protection against inflation and as an asset that provides security during times of economic instability.
GLD was among the first exchange-traded funds (ETFs) designed to track gold’s price. Trading began in 2004. Each share represents one-tenth of an ounce.
What is GLD?
GLD, created in 2004 and traded on the NYSE Arca since 2004, is an exchange-traded fund designed to track the price of gold. Each share represents fractional beneficial ownership in a trust holding physical gold bullion bars stored in London vaults – meaning investors in GLD benefit from rising gold prices while they lose money when metal values decrease.
Trading commodity futures contracts often carries leverage that magnifies profits and losses, while shares in GLD are physically backed. Therefore, their prices tend to be less volatile than the futures market.
GLD shares are easier to trade than physical gold bullion, yet retail GLD shareholders do not own any of the gold held in trust; rather, they are simply creditors of the fund and must obtain approval to withdraw holdings by “authorized participants”. This arrangement is similar to owning shares in a public company.
Why is GLD so popular?
GLD is one of the world’s most popular exchange-traded funds (ETFs), enabling investors to gain exposure to an asset class which has recently gained in favor due to increased equity market volatility and fears of recession.
Investors may hold physical gold such as coins and bars, but that requires storage space and higher transaction costs. GLD provides investors with an easier solution: buying and selling gold without all the hassle.
GLD ETF was an innovation when it launched in 2004, revolutionizing investing in gold. Before that point, investors could only access physical gold via shares in companies which owned or leased bullion directly. GLD trades like any stock on NYSE Arca and is backed by physical bullion stored at HSBC Bank USA London vaults; one share represents approximately one tenth of an ounce. Furthermore, it features low management fees and no custodian fees, providing cost-effective exposure to this precious metal.
Is GLD a good investment?
GLD is one of the oldest and most-traded Exchange-Traded Funds (ETFs) available on the market, providing exposure to gold bullion prices. Trading like stocks, each share represents one-tenth of an ounce of bullion; investors may use GLD for short-term trading purposes or as part of longer-term portfolio allocation strategies.
Gold provides a natural hedge against inflation and is frequently considered an safe haven investment during economic crises and unrest. Gold prices tend to increase during times of turmoil or political unrest.
GLD shareholders remain unsecured creditors of the fund and are therefore unprotected under U.S. government bankruptcy laws. Furthermore, there may be costs associated with owning shares in an ETF; investors should carefully consider all fees prior to making a long-term commitment to GLD and also its tax consequences before investing.
How can I invest in GLD?
GLD is one of the oldest gold exchange-traded funds (ETFs), trading on the New York Stock Exchange like any other stock. Each share represents fractions of an ounce of precious metal; unlike many other gold funds which include both bullion investments and stocks of companies involved with mining or production of gold, GLD invests exclusively in bullion itself for pure exposure to price movements in gold prices.
Investors have increasingly turned their focus towards gold and its related investments as an effective hedge against inflation, providing a safe haven investment option when the economy remains uncertain. Furthermore, recent reports of an anticipated Fed rate-hike pause has given gold stocks and bullion prices an unexpected boost since March lows. If you’re seeking an addition to your portfolio or source of extra income consider these gold ETFs with liquid charts as potential candidates for consideration.
