Owning shares of GLD is not the same as owning real physical gold. It's very important for potential investors to understand this. Gold exchange-traded funds (ETFs) expose traders to movements in the price of gold without having to buy the underlying physical asset. Gold ETFs are usually structured as trusts.
Under this structure, the ETF has a certain number of gold ingots for each ETF share issued. Buying an ETF share means owning part of the gold held by the trust. Holding GLD is clearly not the same as owning physical gold, it just serves different purposes. The GLD allows investors to play with physical metal without facing underlying costs or logistical problems, but it does not entitle investors to a real amount of gold.
The GLD helped to make the market more democratic, to a certain extent, but it also injected liquidity, fueling greater price volatility. No matter what Toussaint or anyone else says, there will always be skeptics, but as long as gold maintains its trajectory, GLD will continue to thrive. Its shares cost 40 basis points, are worth approximately one tenth the price of an ounce of gold and are backed by real gold ingots that are in a secure vault. In 2004, the launch of the publicly traded fund SPDR Gold Trust, with the symbol GLD, equalized the conditions for investment in gold by allowing a cheaper option than buying physical metal.
VelocityShares' long gold ETN (UGLD) aims to provide three times the return of the S%26P GSCI Gold ER Index in a single day.