• SPDR® Gold Trust (the “Trust”) is an exchange traded fund designed to track the price of gold (net of Trust expenses).
The value of the gold held by the Trust is determined using the LBMA Gold Price PM. For further information and risks regarding the LBMA Gold Price PM, please refer to the offering documents found on ssga.com*.
Investment involves risks, in particular, investing in one single commodity asset class. Fluctuation in the price of gold may materially adversely affect the value of the Trust. Investors may lose part or all of their investment.
The trading price of the SPDR Gold Shares may be different from the underlying NAV per share.
The Trust may not be suitable for all investors. Investors should not invest based on this marketing material only. Investors should read the Trust’s prospectus, including the risk factors, take into consideration of the product features, their own investment objectives, risk tolerance level, etc. and seek independent financial and professional advices as appropriate prior to making any investment.
Investors have several options to consider when looking to gain exposure to gold and tap into its diverse potential benefits. Understanding the potential advantages and considerations for the different gold investment vehicles – be it ETFs, mutual funds, gold bars and coins or gold mining stocks, can help an investor to determine which option is best suited to their personal investment situation.
Gold-Backed ETFs offer investors gold exposure through the many benefits of passive ETF investing, including the access and transparency of intraday trading on national exchanges and lower average expense ratios than those of many of the other options. Physically backed gold ETFs, like SPDR’s gold ETFs, provide a cost-effective way to access gold bullion through a historically low-transaction-cost vehicle with low bid-ask spreads and low tracking error1 to the market price of gold.
ETFs may also provide deep liquidity and access to the market to rebalance and position exposures. But it’s important for investors to note that not all gold ETFs are created equal — or invest exclusively in gold bullion — and investors should carefully review the holdings to determine how much of the ETF’s portfolio is invested in physical gold. This is especially true when comparing gold mining ETFs and gold mutual funds that invest only a small portion of their assets in gold.
Gold Mutual Funds provide investors with the same daily liquidity as gold ETFs do, but they do not trade intraday on national exchanges, as do ETFs. And many mutual funds that hold gold in their portfolio of investments may not exclusively invest in gold, which means they may not track gold’s price movements and reap the full value of gold’s diverse potential benefits. Mutual funds also tend to maintain a higher total expense ratio than that of many ETFs.2
Gold Mining Stocks and ETFs are another way that investors can gain exposure to gold. But investing in these companies is not the same as directly investing in gold bullion or a gold-backed ETF. These represent investments in gold mining companies and operations, and these companies may be impacted by certain additional factors beyond the price of gold — such as profitability, industry competition, and other financial and operational decisions.
Gold Bars and Coins remain the most popular way that global investors access gold. But that habit may be shifting — especially in 2020, as we have seen gold-backed ETFs reach record highs this year. Although directly holding bars and coins has a high level of transparency with physical possession, investors are often required to pay a premium over the spot price of gold for their purchase. Cost and liquidity considerations also come into play when holding bars and coins outright — including costs for insurance, transportation and safekeeping, each of which can impact the underlying performance benefits realized.
Gold futures are often used by larger or institutional investors looking to leverage their portfolios. Gold futures provide intraday trading and a way to manage underlying risks of other securities held in their portfolio. Gold futures require unique knowledge about the gold market and are not typically the vehicle of choice for the average investor.
Gold futures are not physically backed by gold, and they carry defined expiration dates, which require holders to roll over the contract according to a scheduled expiry to maintain their gold exposure. Although gold futures are generally traded in larger positions with lower brokerage commissions due to their size, the associated brokerage and roll costs need to be considered when determining the total cost of ownership.
Choosing ETFs for Gold Exposure
For many investors, the case for gold ETFs may be strong relative to those for other gold investment vehicles, particularly in terms of accessibility, transparency, and cost. ETFs often provide a higher degree of flexibility for investors at a potentially lower overall cost than many of the other options do – and gold-backed ETFs are no exception.
Gold ETFs have grown to record levels in terms of popularity and AUM since 2004, when SPDR ETFs introduced the first physically backed gold ETF designed to track the price of gold bullion, SPDR Gold Shares® (GLD®). Since that time, gold investing via gold-backed ETFs has grown to US $201 billion in assets.3
Gold ETF usage ramped up during the early stages of the pandemic. In the first nine months of 2020, we saw gold-backed ETFs hit record highs — adding 24% or US $55.7 billion4 when market volatility reached an all-time high due to the economic disruption from COVID-19. By the end of 2020, gold ETFs saw $48.8 billion in inflows globally — and North American investors were responsible for adding $31.9 billion of that total. Europe saw flows of $13.8 billion, and Asia saw $2.2 billion.5 Global investors — US investors in particular — have responded to eroding market conditions, placing assets into gold-backed ETFs as market volatility and uncertainty have risen – tapping into the diversification, liquidity and risk-adjusted returns that an allocation to gold may potentially offer.6
Work with a Global Gold Leader
In November 2004, the World Gold Council partnered with SPDR ETFs to launch GLD®, the first US gold-backed exchange traded fund. GLD’s arrival made it convenient and cost effective for investors to hold gold in their portfolios. Since then, GLD has reached over $55.5 billion in assets,7 making it the largest and most liquid gold-backed ETF in the world.8
1 Bloomberg Finance L.P. & State Street Global Advisors. Note: SPDR® Gold Trust GLD average daily bid-ask spread is 0.01% and tracking error is 0.004065 from 01/01/2011 to 09/30/2021. Effective March 20, 2015, the SPDR Gold Trust (GLD) adopted the LBMA Gold Price PM as the reference benchmark price of gold in calculating the Net Asset Value (NAV) of the Trust. Prior to that date, the Trust used the London PM Fix as the reference benchmark price in calculating the NAV. SPDR® Gold MiniSharesSM Trust GLDM average bid-ask spread is 0.07% and tracking error is 0.001437 from June 26, 2018 (fund inception) to September 30,2021. GLDM has used LBMA Gold Price PM as the reference benchmark price of gold in calculating the NAV of the Trust.
2 Morningstar Direct; Note: Average Gross Expense Ratio (%) for ETFs and Mutual Funds are 0.55% and 0.89%, respectively. Average Prospectus Net Expense Ratio for ETFs and Open-end Mutual Funds oldest Share class as defined by Morningstar, as of September 30, 2021.
3 World Gold Council – Global gold-backed ETF flows September 30, 2021.
4 World Gold Council – Global gold-backed ETF flows September 30, 2021.
5 World Gold Council – Global gold-backed ETF flows September 30, 2021.
6 Diversification: Source: Bloomberg Finance L.P and State Street Global Advisors, as of September 30, 2021. Gold has demonstrated a low (or sometimes negative) correlation to many financial asset indices over the last 20 years, with a 0.03 correlation to the S&P 500 Index and a 0.35 correlation to the Bloomberg Barclays Aggregate Bond Index from September 30, 2001 – September 30, 2021.
Liquidity: Source: World Gold Council, as of 9/30/2021. Gold has maintained an average daily trading volume of $160 billion compared to an average daily trading volume for the S&P 500 of $240 billion for the period 1/1/2021 – 9/30/2021.
Returns: Bloomberg Finance L.P. and State Street Global Advisors. On a longer-term basis, gold has returned 0.8% over a 10-year period from 9/30/2011 to 9/30/2021, and 9.4% for the 20 years from 9/30/2001 to 9/30/2021, while the S&P 500 provided a return of 16.41% and 9.5%, respectively, for the same periods ended 9/30/2021. Notes: gold is represented by LBMA gold price PM ($/oz.). Past performance is not a guarantee of future results.
7 Bloomberg Finance L.P. and State Street Global Advisors, as of September 30, 2021.
8 Bloomberg Finance L.P. and State Street Global Advisors, data as of September 30, 2021.
Bid-Ask Spread, or Spread
The difference between the highest price a buyer is willing to pay for an asset and the lowest price the seller will accept to sell. Bid-ask spreads are a key measurement of the liquidity of an asset or security.
Financial contracts that obligate buyers and sellers to buy or sell an asset — often physical commodities or financial instruments — at a predetermined future date and price. Futures contracts also stipulate the quality and quantity of the underlying asset and are standardized to facilitate trading on a futures exchange. Some futures call for physical delivery; others are settled in cash.
The ability to quickly buy or sell an investment in the market without impacting its price. Trading volume is a primary determinant of liquidity. There can be no assurance that a liquid market will be maintained for ETF shares
The potential cost associated with selling an expiring futures contract and purchasing a longer-dated contract to maintain exposure to a particular asset. When the longer-dated contract is more expensive than the expiring contract, the market is said to be in contango; therefore, “rolling” into the longer-dated contract can be a drag on performance.
Total Cost of Ownership
The purchase price of an asset plus the costs of operation.
Tracking error is a measure of how consistent a portfolio’s return is with that of its benchmark. In reality, no indexing strategy can perfectly match the performance of the index or benchmark, and the tracking error quantifies the degree to which the strategy differs from the index or benchmark by measuring the annualized standard deviation between the two values.
The tendency of a market index or security to jump around in price. Volatility is typically expressed as the annualized standard deviation of returns. In modern portfolio theory, securities with higher volatility are generally seen as riskier due to higher potential losses.
Commodities and commodity-index linked securities may be affected by changes in overall market movements, changes in interest rates, and other factors such as weather, disease, embargoes, or political and regulatory developments, as well as trading activity of speculators and arbitrageurs in the underlying commodities.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent. Nothing on this web page constitutes investment advice and should not be relied upon as such. The value of units in the GLD ETF (the “Fund”) may fall or rise. Past performance of the Fund is not indicative of future performance. Distributions from the Fund are contingent on dividends paid on underlying investments of the Fund and are not guaranteed. Listing of the Fund on the HKEX/ SGX does not guarantee a liquid market for the units and the Fund may be delisted from the HKEX/ SGX. The Fund’s Prospectus is available from State Street Global Advisors or can be downloaded from http://www.spdrgoldshares.com/
For Hong Kong: SPDR® Gold Trust (the “Trust”) is an exchange traded fund designed to track the price of gold (net of Trust expenses). Investment involves risks, in particular, investing in one single commodity asset class. Fluctuation in the price of gold may materially adversely affect the value of the Trust. Investors may lose part or all of their investment. The trading price of the shares may be different from the underlying NAV per share. The Trust may not be suitable for all investors. Investors should not invest based on this [advertisement/marketing material] only. Investors should read the Trust’s prospectus, including the risk factors, take into consideration of the product features, their own investment objectives, risk tolerance level etc. and seek independent financial and professional advices as appropriate prior to making any investment.
For Singapore: The prospectus in respect of the Singapore offer of the shares in the Trust is available and may be obtained upon request from State Street Global Advisors Singapore Limited ("SSGA") (Co. Reg. No: 200002719D). Investors should read the prospectus of the Trust before deciding whether to purchase Shares. Shares in the Trust are not obligations of, deposits in, or guaranteed by, World Gold Trust Services, LLC, SSGA or any of their affiliates. The value of Shares and the income accruing to such Shares may fall or rise. You should consider whether the Trust is suitable for you. If in doubt, you may wish to seek advice from a financial adviser before making a commitment to purchase Shares. Investors have no right to request the Sponsor to redeem their Shares while the Shares are listed. It is intended that holders of Shares may only deal in their Shares through trading on the SGX-ST. Listing of the Shares on the SGX-ST does not guarantee a liquid market for the Shares. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs’ net asset value. Brokerage commissions and ETF expenses will reduce returns.
Past performance is not a guarantee of future results.
Diversification does not ensure a profit or guarantee against loss.
Investing in commodities entails significant risk and is not appropriate for all investors.
Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. T: +852 2103-0288. F: +852 2103-0200.
All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns. Standard & Poor’s®, S&P® and SPDR® are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation's financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
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