Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Inside GLD: Q&A With Tim Coyne of State Street


Tim Coyne, Global Head of SPDR ETF Capital Markets Group, discusses gold investment options.

cHQ: How do you respond to the conspiracies that GLD does not actually hold physical gold in HSBC's vaults, GLD's custodian?

TC: This is probably the number one question we get, and I assure you the gold is real. There are four parties that are involved in GLD: The World Gold Council is our sponsor, the World Gold Trust Services is the issuer of GLD, State Street Global Advisors is the global marketing agent, and Bank of New York Mellon is the trustee. HSBC London is the custodian of the fund, so that is where all the physical gold actually resides. Essentially the way the creation redemption process works is there are over 20 authorized participants who are able to create shares directly with the trust, and delivery is in kind, so there is no cash creation or redemption.

There is a complete gold count once per year and a random count at some point during the fiscal year; all of this is documented and shared on the website, Investors can actually see the certificate bar number of all of the bars that are held in the allocated account. That the gold in the trust is allocated is an important point because it lets you know the bars are specifically for the GLD trust, not just for HSBC. There is a large amount of information on the website for investors to make the product as completely transparent as possible.

cHQ: Why should someone choose GLD over other gold investment options?

TC: You get pure exposure to the gold market, and if you compare our product apples to apples to others in the market space, the liquidity is far superior. When considering the cost of owning a gold ETF you definitely need to take into account not only what the expense ratio is, but also the cost of trading. We try our best to educate clients that a lot has been written about expense ratios and fees, but that does not encompass your full cost; you have to look at trading costs and other factors to get the full picture of your annual expenses.

cHQ: How do you see gold performing in the coming years?

TC: Apart from the fact that GLD is a great diversifier for any portfolio, the fiscal cliff, inflation, and QE3 are definitely positive things for gold, and we have seen that some of our larger clients have been investing additional assets into GLD. It's a safe haven during times of financial duress, and given some of the economic conditions we have seen in the market place right now, gold is definitely the place to be. Many investors take a long approach to investing in gold and view it as a mainstay of a diversified portfolio. Gold plays an important strategic role as an inflation and currency hedge, as well as a means of mitigating volatility and reducing systemic risk within a portfolio. We expect interest in gold investing, notably GLD, to continue to grow.

Follow us on Twitter @CommodityHQ

Editor's note: This article by Jared Cummans was originally published on Commodity HQ.
No positions in stocks mentioned.
Featured Videos