What Exactly is GLD?

Question

On the stock market, there's a symbol GLD. It stands for StreetTracks Gold.

What exactly does this stock do? Does it buy gold futures? Does it buy and hold gold? What is it exactly?

Answer 1

I own shares of GLD. If you buy it, you are directly buying gold that is in a vault near London (as more people buy, the gold price does not go up because they use the money to buy more gold for the vault). GLD exactly follows gold prices except for a 0.5% commission taken per year to pay for management and security expenses.

Answer 2

This is an ETF. Here is State Street's own explanation of what ETFs are...
http://advisors.ssga.com/etf/etf_basics.html

This said, GLD (together with its sister SLV) is a very unique ETF. It invests without leverage in physical gold. In other words, this a way for the average investor to invest in the metal and not in equities, futures or any other "indirect" play.

Just like any stock you can go "long", margin it or sell "short".

Answer 3

streetTRACKS Gold Trust is an investment trust whose shares strive to reflect the performance of the price of gold bullion, less the Trust's expenses. The Trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemptions of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the Trust terminates and liquidates its assets, or as otherwise required by law or regulation. The Trust is not managed like an active investment vehicle, and it's not registered as an investment company under the Investment Company Act of 1940.

Answer 4

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