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World Gold Council and SSGA launch US-listed gold-backed ETF

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The World Gold Council, the market development organisation for the gold industry, and State Street Global Advisors (SSGA) have launched the SPDR Long Dollar Gold Trust (GLDW) on the NYSE Arca.

GLDW seeks to track the performance of the Solactive GLD Long USD Gold Index, less fund expenses.
 
“The price of gold and the US dollar have historically tended to move in opposite directions,” says Nick Good, co-head of the Global SPDR business at State Street Global Advisors. “By lessening the dollar’s potential impact on gold, GLDW seeks to provide investors the opportunity to realise the potential benefits of using gold as a strategic portfolio diversifier, while offering the ability to buffer against the potential adverse effects of a strong dollar on gold.”
 
From 31 December 2013 to 30 December 2016, three years of persistent dollar strength, gold priced in USD fell from USD1,205/oz to USD1,146/oz, a 5 per cent decline. However, when the effect of a strengthening USD is removed, gold priced in non-US currencies, such as the Euro, increased from EUR873/oz to EUR1,096/oz, a 25 per cent increase.
 
The fund seeks to track the Solactive GLD Long USD Gold Index, which combines both a long position in physical gold and long dollar exposure against a basket of non-US currencies. Performance of the US dollar against this currency basket is expected to increase or decrease the amount of gold held by GLDW. GLDW holds physical gold in the form of 400 ounce London Good Delivery bars stored in the Custodian’s London vault, except when GLDW’s physical gold has been allocated in the vault of a sub-custodian solely for temporary custody and safekeeping.
 
“GLDW is the first ETF listed in the US backed by physical gold that is designed to hedge the movement of gold against the US dollar,” says Joseph Cavatoni, principal executive officer of GLDW’s sponsor, and managing director USA and ETFs, World Gold Council. “For investors and advisors incorporating currency movements into their investment thesis, the SPDR Long Dollar Gold Trust provides a convenient vehicle to lessen the potential impact of the dollar on gold prices by creating the economic effect of owning gold with a basket of non-US currencies. Together, GLDW and GLD may allow investors to enjoy the diversification benefits of holding gold in either strong or weak dollar environments.”
 
The net and gross expense ratio for GLDW is 0.50 per cent.

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