by Jan Nieuwenhuijs, Voima Gold:
Exchange-Traded Funds (ETFs) are an important element in the global gold market. The largest gold ETF is the “SPDR Gold Trust,” which is traded on the New York Stock Exchange Arca (NYSE Arca) under the symbol “GLD.” In this article, we will examine how GLD works to understand its role in the gold market and its impact on the gold price.
In general, ETFs are funds that hold and track the price of assets like a commodity or stock market index. But unlike normal funds, ETFs are conveniently traded on stock exchanges. ETF securities represent shares of ownership in the fund. In the case of GLD, shareholders own a segment of the Net Asset Value (NAV) of the fund, which mainly holds physical gold. So, owners of GLD shares don’t own the gold itself, but a slice of the fund. As with other derivatives, GLD provides exposure to the price of the underlying asset.