One of the many uses of exchange-traded funds (ETFs) is their ability to allow investors exposure to commodities without having to worry about futures contracts or owning the underlying physical commodity. The SPDR Gold Shares (GLD) is one such ETF, giving investors the capability to invest in physical gold bullion without having to handle buying and selling it themselves.
Gold often is used as an investment because its performance tends to run counter to the stock market. This potential rise in gold is due to its innate value, since it traditionally is seen as a safe haven for assets in treacherous markets. Historically, gold performs well when the market goes down, so the precious metal can provide a good way to make money in rough times.
In 2014, GLD lost 2.19% of its value, as investors primarily chose to speculate in riskier equities while market sentiment was bullish. So far this year, though, GLD has risen 1.25%, as the market has been more volatile. GLD’s $27.4 billion in assets correspond to its holdings and may fluctuate with the price of gold.
GLD is the world’s ninth-largest ETF. Though GLD carries a 0.40% expense ratio, buying and selling physical gold would incur expenses that would likely be far greater, so the fund still provides an attractive possibility for gold ownership without the hassle of finding a place to store it safely.
Gold has fallen a long way from its 2011 heights. That drop suggests it may have room to run, especially if the stock market undergoes a concerted pullback. For gold bugs and investors who think now is the time for a golden rally, you won’t find a more direct ETF investment than SPDR Gold Shares (GLD).
If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.
In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about a small-cap ETF. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.
