Gold thrives on bad news. When the economy is in a downturn and stock markets are going south, investors tend to park their funds in gold and wait out the storm. The demand for gold increases in a downturn economy, and consequently the value of gold also increases. Gold - bullion, coin, or gold-indexed ETFs - see thriving business.
This article will discuss the SPDR Gold Trust ETF (NYSEARCA:GLD) as an example of how gold reacts to economic downturns. I will touch on certain aspects of investing in gold such as the correlation between stock markets and the value of gold and historical data.
SPDR Gold Trust - Basic Facts
SPDR Gold Trust was formed as an investment trust on November 12, 2004, with the objective of providing investors a safe, secure and relatively cost effective access to the gold market. The trust is sponsored by World Gold Trust Services, LLC. A division of Bank of New York (BK), the BNY Asset Servicing is the trustee of SPDR Gold Trust. State Street Global Markets, LLC is the marketing agent of the trust.
SPDR Gold Trust invests only in gold, which is its one single asset apart from the occasional cash. HSBC Bank USA, NA is the custodian and also responsible for the logistics, audit and insurance of the gold held by GLD.
The primary motive of the trust is to remove roadblocks faced by institutional and retail investors wanting to invest in gold, which it achieves by issuing shares from time to time, which trade on NYSE ARCA, Inc., or NYSE ARCA. GLD shares track the performance and value of gold bullion less the expenses of the trust including that of the custodian. Being an Exchange Traded Fund, GLD offers an opportunity for investors to participate in the gold market without the hassle of actually holding
