SPDR Gold Shares
Want to buy gold? Do you know gold worth the most in the form of bullion bars? Gold jeweleries are not considered as good investment because the price that you paid includes designer and processing cost, on top of the gold material itself. These additional costs do not retain their value over time. On the other hand, buying gold bullions are very costly and not all retail investors can afford them.
The good news is now you can own ‘part’ of a gold bullion bars – the answer is gold shares! There is an Exchange Traded Fund for Gold which tracks the gold – SPDR Gold Shares. It is both available in NYSE (US) and SGX (Singapore). From the prospectus – “The investment objective of the Trust is for the Shares to reflect the performance of gold bullion, less the Trust’s expenses.” By buying gold collectively, the expenses of carrying, storing, insuring the gold is lowered and can be passed on to the investors – justifiable by their 0.4% expense.
In addition, gold shares are highly liquid as it can be traded over the above mentioned exchanges. Before such gold shares were available in 2004, investors have to acquire gold through banks which the process is troublesome and does not provide as much liquidity. You can now go through your usual broker to purchase gold shares throughout a trading day. Real gold bullion bars are purchased by the trust on behalf of the gold shares investors and are kept “in the form of allocated 400 oz. London Good Delivery Bars in the London vaults of HSBC Bank USA.”
When does gold price rally? High inflation period – During this period, currency devalues and thus, many people will start to exchange currency for gold to protect their wealth. Such demand would inevitably push gold prices up. You can read “The Coming Economic Collapse” for the performance of gold during the 1970s oil crisis – a whopping 550% increase in real returns for gold shares! Gold tends to have an inverse relationship with company shares. During bullish stock market, gold would have lackluster performance.
Singapore
Expense ratio – 0.40%
Symbol – SPDRS 10US$
Minimum Order Size – 10 shares
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