ETFs are a financial instrument traded on the stock market and designed to track the market price of another asset, such as a group of businesses, bonds, or a specific commodity. Created as a trust, an ETF will typically hold enough of the underlying asset to back its market value. Investors then own shares in that trust, but do not own the underlying asset directly.
The largest gold ETF is the SPDR Gold Trust (ticker: GLD). At the gold-price peak of 2011, it was the largest ETF in the world, overtaking the S&P ETF (ticker: SPY), which tracks the value of the US stock market. To cover storage and other fees, the SPDR charges an annual management fee of 0.40%. It is deducted daily from the amount of gold backing each share, meaning that the net asset value of the shares shrinks over time, down from one-tenth of an ounce at launch in 2004 to some 96.5% in late 2013.
Unlike a gold ETF, BullionVault charges its users, who own their property outright, storage fees in cash. The monthly fee for gold, with insurance included, is 0.01%. There is a monthly minimum of $4 or equivalent.« Back to Glossary Index