For individuals seeking to learn about analyzing Exchange-Traded Funds (ETFs), I suggest reviewing my earlier post that explains the fundamentals of ETFs and the analysis process.
SPDR Gold Shares (GLD) - Snapshot
Overview
The SPDR Gold Shares (GLD) ETF aims to reflect the performance of the price of gold bullion. It's one of the most popular ways for investors to gain exposure to gold without holding physical gold. A safe haven of sorts.
Gold bullion is a physical asset that refers to a large amount of refined gold that is at least 99.5% pure. It can be shaped into bars, ingots, or coins.
Investment Strategy
GLD holds gold bullion as London Good Delivery bars, with its performance linked to the LBMA Gold Price. The ETF trades shares for gold, which guarantees that the share value mirrors the gold price closely.
The LBMA (London Bullion Market Association) is an international trade association, representing the London market for gold and silver Bullion with a global client base. This includes the majority of the gold-holding central banks, private sector investors, mining companies, producers, refiners and fabricators.
Top Holdings
GLD's top holdings consist entirely of gold bullion, with no other assets. The fund holds gold bars stored in secure vaults in London.
Sector Allocation
Since GLD is a gold-focused ETF, its sector allocation is 100% in the precious metals sector.
Performance
As of October 16, 2024, GLD has a year-to-date return of approximately 28.64%. The ETF has performed well, reflecting the rise in gold prices over the year.
Expense Ratio
GLD has an expense ratio of 0.40%, which is relatively low for a precious metals ETF
This means that for every $1,000 invested, the annual cost would be $4.
Dividend Yield
GLD does not pay dividends.
Other Information
Inception Date: GLD was launched on November 18, 2004.
Net Assets: As of October 16, 2024, GLD has net assets of approximately USD 73.7 billion.
Liquidity: GLD is highly liquid, with an average daily trading volume of around 6.35 million shares.
Similar Alternatives
Canadian investors seeking alternatives to the SPDR Gold Shares (GLD) ETF for gold exposure can consider several ETFs and related investments. Options include:
BMO Gold Bullion ETF (ZGLD): This ETF holds physical gold and aims to reflect the performance of the price of gold, similar to GLD.
iShares Gold Trust (IAU): Although it's a U.S.-based ETF, it can be purchased by Canadian investors and holds physical gold.
Sprott Physical Gold Trust (PHYS): This ETF holds physical gold and is available to Canadian investors.
Here's a comparison of the expense ratios, yield, and performance of the GLD ETF and its close alternatives:
Target Investors
The SPDR Gold Shares (GLD) ETF is designed for a variety of investors, including:
Individual Investors: Those looking to invest in gold as a way to diversify their portfolios and hedge against inflation and economic uncertainty.
Retirement Accounts: Investors who want to include gold in their retirement portfolios.
Long-Term Investors: Individuals seeking long-term exposure to gold and its potential for capital appreciation.
Risk-Averse Investors: Those looking for a safe-haven asset that can provide stability during market downturns.
GLD offers an attractive option for investors seeking to invest in gold without possessing the physical metal, offering a practical and fluid method to acquire exposure to this valuable commodity.
Reason to Invest…
Hedge Against Inflation: Gold is often seen as a hedge against inflation, as its value tends to rise when the cost of living increases.
Diversification: Adding gold to your portfolio can help diversify your investments, reducing overall risk.
Safe-Haven Asset: Gold is considered a safe-haven asset during times of economic uncertainty or geopolitical turmoil.
Liquidity: GLD is highly liquid, making it easy to buy and sell shares quickly.
No Storage Concerns: Unlike physical gold, GLD eliminates the need for storage and insurance costs.
Historical Stability: Gold has historically maintained its value over the long term, providing a stable investment option.
Reason Not to Invest…
No Income Generation: GLD does not pay dividends, so the only way to make money is through price appreciation.
Market Volatility: Gold prices can be volatile, and the value of GLD shares can fluctuate significantly.
Opportunity Cost: Investing in gold means missing out on potential gains from other investments, such as stocks or bonds.
Management Fees: While GLD has a relatively low expense ratio, there are still management fees to consider.