How Do I Invest in GLD?
Gold is an asset worth investing in and can be purchased both physically or as an exchange-traded fund (ETF), such as SPDR Gold Trust or GLD. Suzanne Hutchins, Newton’s head of real return investments told Forbes she preferred GLD because it is physically backed.
There are various methods of investing in gold, including buying physical commodities and shares in companies involved in gold-related businesses, and investing in exchange-traded funds (ETFs) offering exposure without purchasing physical metal directly.
GLD, or the SPDR Gold Trust, is a publicly traded fund that follows the price of gold. Since 2004 when trading began on this fund, its shares represent fractional ownership interests in physical gold bullion held at Bank of New York Mellon as trustee.
Investors can access GLD shares through a broker, similar to any other security, while actual bullion is held in London at HSBC’s vault. Authorized Participants, which are registered broker-dealers who have entered an agreement with BNY Mellon as its trustee and sponsor, are permitted to create and redeem shares of the fund.
GLD is the world’s most widely traded gold ETF. Its shares trade like stocks on the NYSE Arca exchange, with their value reflecting physical gold held by GLD less expenses; however, their shares should not be seen as a replacement for long-term investment strategies such as bullion investments.
Retail GLD stock shares do not give their owners ownership in physical gold bullion, contrary to what their marketers may suggest. Instead, these shares remain unsecured creditors of the fund and can be lost during a bankruptcy proceeding.
At this stage of your investment journey, selecting an ETF with a large market cap such as SPDR GLD or iShares SLV may be important to reduce costs while adding metal exposure to your portfolio easily and affordably.
Ease of trading
GLD is one of the most popular ways to invest in gold, and provides investors with many advantages over physical metal. Trading GLD is easy and does not incur storage fees, while providing investors with high levels of liquidity and providing high levels of market exposure.
However, its growing popularity does come with some hidden risks that many investors fail to appreciate. Beyond the usual risks associated with physical gold bullion ownership, GLD shares also come with their own set of hidden perils when created or redeemed.
Investors are withdrawing funds rapidly from the world’s largest gold ETF as trade tensions ease, but inflation could also be contributing to this rapid withdrawal trend.
Suzanne Hutchins, Chief Investment Manager for Global Funds at Newton Real Return Investments Team within BNY Mellon, recently told Forbes she preferred GLD due to its physical backing – it holds 400-oz gold bars at HSBC’s vaults in London and issues shares based on this asset holding.
The SPDR Gold Shares ETF (GLD) is an easy and affordable way to invest in gold. Established in 2004, GLD boasts a longstanding track record of stability and reliability; as the world’s largest gold-backed ETF. GLD’s physical investment approach ensures its performance matches closely with price fluctuations in gold prices.
Investors seeking alternatives to physical gold should consider investing in either the iShares Gold Trust ETF (IAU) or abrdn Physical Gold Shares ETF (SGOL), both offering lower expense ratios than GLD but at significantly less expense overall. Investors should keep in mind, however, that these funds are considered collectible investments by the IRS and subject to higher rates than long-term capital gains when reporting taxes.
No matter which ETF you select, it is essential that you understand their ability to track gold prices and how that impacts returns. Furthermore, always seek professional financial advice prior to making any investment decisions; this Site and its contents should only be used as general references and should not serve as a replacement for professional advice.