Five years ago this week, an obscure little ETF called StreetTracks Gold Shares was born. As the first American ETF enabling stock traders to gain direct price exposure to a physical commodity, GLD was truly revolutionary. Now known as SPDR Gold Shares, this ETF has proven to be a smashing success.
Today GLD is the second largest ETF on the planet, behind only SPY which tracks the flagship S&P 500 stock index. GLD now holds a staggering 1117 metric tons of physical gold bullion in trust for its shareholders, which was worth $41.3b this week! This “people’s central bank” fueled by stock-trader gold demand has amassed so much bullion it now boasts the world’s sixth-largest holdings.
Today GLD holds more gold bullion than the individual central banks of China, Switzerland, Japan, Russia, Europe, and India! Overcoming some controversy after its introduction, GLD has matured into the juggernaut of the gold world. Through their collective buying and selling of GLD shares, stock traders now have far more influence over daily gold price action than the world’s central banks.
With this still-growing ETF already a force to be reckoned with, no investor or speculator in the precious-metals realm can afford to ignore it. GLD’s impact is broad and expanding, and its trading activity alone can drive the global gold price at times. And where gold goes, silver and the PM stocks inevitably follow. Thus PM traders who fail to stay abreast of GLD’s activity will never fully understand PM price trends.
GLD opened up history’s first direct conduit between gold and the vast pools of capital in the stock markets. In all previous gold bulls, there was no quick and easy way for stock traders to gain gold exposure. They had to either expend the considerable time and effort of learning about gold futures (and opening a new futures-trading account) or suffer steep transaction costs to buy physical coins at high premiums.
These barriers to entry for widespread gold ownership were considerable, as the great majority of stock traders weren’t willing to put in the effort in past bulls. But today, thanks to GLD stock traders can instantly gain gold exposure, at a trivial cost, with a click of the mouse. This has led both institutional and individual stock investors and speculators to funnel capital into gold like never before in history.
GLD’s mission is to track the gold price,…
