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GLD's Birthday: Gold ETF doesn't have much to celebrate

GLD was probably hopping for a glitzier 10th birthday party.

Since its launch in November 2004, the Spider Gold Trust ETF, best known by its ticker GLD, revolutionized investing in gold. Once the playground of kings and queens, GLD helped introduce trading in the yellow metal to individual investors, while bringing the liquidity and transparency many big name hedge funds wanted.

When GLD started a decade ago, it gave investors the ability to have exposure to gold in their portfolios without actually having to store bars and coins at the bank or their home. The fund, now the largest physical gold fund in the world, has roughly 1 million account holders.

William Rhind is the CEO of World Gold Trust Services which oversees GLD. He says part of the success of the fund is how it simplified investing in one of the world’s oldest and most sought after commodities.

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“GLD is gold and simply put a share of GLD is a tenth of an ounce of gold. It allows people to invest in gold just in exactly the same way as you would any other stock in the market. If you want gold in your portfolio GLD is a very simple way to do that.”

Simple, but volatile. While investors piled into GLD following the financial crisis. Its safe haven status hasn’t been paying off, as of late, with the U.S. economy improving and the strong dollar in command.

Still Rhind insists there’s a place for GLD in a diversified portfolio. “It actually decreases the volatility of the overall portfolio when added in a mix of equities and bonds.”

With the luster off gold and the precious metal trading near four year lows, GLD has seen outflows, but Rhind says he’s looking for ways to bring the next generation of investors into the market. One of which will be reaching out to groups of investors who are underweight gold, but for whom the investment makes fiscal sense. Rhind suggests endowments. pension funds and philanthropies as key untapped markets.

In addition he says the World Gold Council has plans for at least one companion fund to be released sometime later next year. "This new product will be a publicly traded ETF, and will be a companion fund to GLD, building on its heritage as an alternative investment backed by physical gold," Rhind said in a statement.

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