Gld ETF, Spdr Gld ETF

By: EconomyWatch   Date: 30 July 2009

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Gld ETF, Spdr Gld ETF or Gold ETF is a type of exchange traded fund that gives traders exposure to one of the world’s most secured commodities, gold. This precious metal has mobilized economies and financial instruments world over for decades. Ever since the discovery of gold, people have used this metal as their standard of wealth and buying capabilities. Gold was used as a currency and has been a medium of investment for thousands of years.

 

Why Gld ETFs?
 

Gold as an asset is unique because the forces that determine the metal’s value are very different from those that impact the financial markets. Investment in gold is, thus, distinct from investments in equity, bonds or mutual funds.

A gold ETF is a defensive investment, as gold is immune to the vagaries of the financial markets. Thus, a gold ETF offers a great opportunity to diversify a portfolio and hedge risks. It enables investors to preserve their portfolio wealth.

SPDR GLD ETF
 

The most popular gold ETF is the SPDR gold ETF, which enables investors to buy gold through its gold stocks. It was listed on the NYSE in November 2004.

The growth of the SPDR Gold ETF has been phenomenal in the US. Taking cue from its popularity in the US, SPDR Gold ETFs are now being traded across geographies like the Singapore stock exchange, Tokyo bourse and the stock exchange of Hong Kong.

Benefits of Gld ETF, SPSR Gld ETF

 

The many advantages of gld ETFs include:

  • They operate like stocks (a trader buys stocks that have gold as the underlying assets). Thus a trader can gain exposure to gold, without having to invest a large amount of money.

  • Gold ETFs are the easiest way to access the gold market without any need to store the bullions.

  • Gold ETFs provide protection against declining currencies and economies.

Disadvantages of Gld ETF, SPDR Gld ETF
 

The disadvantages of gld ETFs include:

  • The high commission of 1% which can eat into your profits.

  • Wealth tax is charged on gold ETFs.

Despite these disadvantages, a gld ETF or the SPDR GLD ETF is a good way to diversify your investment.


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