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 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.
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
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 $78 billion in assets,7 making it the largest and most liquid gold-backed ETF in the world.8 In 2018, we launched GLDMSM, a low-cost gold-backed ETF option, providing an innovative low-cost solution to meet investor demands.
Both ETFs provide investors a relatively efficient and liquid way to access the gold bullion market through physically backed ETFs. Learn more about our heritage in the gold market, or read more about our gold ETFs below.
SPDR Gold Shares® (GLD®) the world’s largest and most liquid gold-backed ETF offers strategic, long-term investors access to the gold market.9
SPDR Gold MiniSharesSM (GLDMSM) offers investors a lower share price and holding costs, at an expense ratio of just 10 bps.
When considering similar products, it’s important to understand both liquidity and overall costs — and the impact that each can have on your portfolio. Get the facts about liquidity and why total cost of ownership matters.