Gold ETF's Lustrous 5th Anniversary
Gold continues to show off its luster - hovering at record high prices nearing $1,150 an ounce today.
At the same time, investor appetite for gold only continues to rise. But thanks to an exchange-traded fund (ETF) breakthrough five years ago today, access to commodity investing has never been easier for individual investors.
Five years ago, the SPDR Gold Shares ETF (GLD) revolutionalized commodities investing, which typically had been reserved for professional traders with futures contract accounts. However, with this new ETF, investing in gold became as easy as buying ordinary stocks. Individuals could now invest in gold by buying GLD shares using a stock broker or through a simple electronic brokerage account used for stock trading.
Designed to track gold prices and backed by gold bullion itself (gold bars stored in vaults), the innovative GLD became the first commodities ETF on the U.S. market. Since then, other commodity-backed ETFs have come to the marketplace, tracking various energy (crude oil, natural gas), metal (silver, aluminum, copper), and even agriculture (sugar, coffee, corn) prices.
Looking back, the timing of the GLD’s launch seems perfect. Gold prices have surged over 150% in just five years.
Gold Prices Then & Now
2004 Today
Per Ounce $443 $1,146
Per Bar $177,200 $458,400
(25-pound bar)
Five years after its launch, the GLD has netted assets of $40 billion, becoming the largest commodity ETF around. Furthermore, it is the 2nd biggest ETF in general, only behind the popular SPDR S&P 500 ETF (SPY), which currently has $77 billion in assets.
Since the GLD has to buy and store gold as investors acquire shares of the ETF, the popularity of the GLD has caused it to amass a huge amount of gold. How much? Impressively, it has become the 6th largest holder of gold in the world, owning more gold than the Chinese, Swiss, or Japanese governments.
World's Top Gold Holders
Tonnes
1. United States 8,134
2. Germany 3,408
3. International Monetary Fund 3,217
4. Italy 2,452
5. France 2,445
6. SPDR Gold Shares 1,114
Source: World Gold Council/State Street Global Advisors
The size of the GLD’s 1,114 tonnes of gold may be hard to imagine, but thanks to State Street Global Advisors (the sponsor of the GLD ETF), take a look at these fascinating tidbits:
- The amount of gold stored in the GLD’s vaults is enough to give every household in the U.S. slightly more than a quarter of an ounce of gold (worth approximately $263.50)
- The GLD’s stored gold equals the weight of more than 823 Mini Coopers
To see what nearly $1 million in gold looks like, be sure to catch Bob Pisani’s interview with the World Gold Council Chairman.
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