What is the relationship between $GOLD Index vs SPDR GLD Shares

[stevenmac2]

Does anyone happen to know how the relationship between $GOLD and GLD is represented? For example, $GOLD Index EOD Contact shows that gold is now at around $1368 per ounce.

$GOLD - SharpCharts Workbench - StockCharts.com

In order to buy Gold, I see that there is a GLD (SPDR Trust Shares) fund established. The current price at the moment is at $130.70

GLD - SharpCharts Workbench - StockCharts.com


My questions are:

1) Is GLD always going to be roughly around 10% of the $GOLD index?
2) To buy over/near 1 ounce of Gold, would I want to place an order for 11 shares @ $130 in GLD = $1430 in $GOLD?
3) Or is there another fund that directly matches to the $GOLD index that can be publicly bought and sold through our brokers?

Thank you...

 

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[stevenmac2]

Anyone have an answer for me about this? Thank you.

 

[Jonleehacker]

It's a pretty big topic, the best thing for you to do is to go to the SPDR website and read the perspectus for the GLD fund. Then a search on Google for how to compare gold ETFs.

Since gold is so hot right now there are a million ways to buy it, with a million levels of quality and various fee structures.

Here are a couple alternatives:

Market Vectors Gold Miners ETF: NYSE:GDX quotes & news - Google Finance Gold miner's index

Central Fund of Canada Limited (USA): AMEX:CEF quotes & news - Google Finance Central Fund of Canada (this one trades at a premium over the price of gold due to it's reputation, you can watch on there website and buy on days when the premium falls)

Also keep in mind that Gold right now is primarily a play against almost every country in world actively devaluing their currencies, so there are other ways to make money on the same fundamentals.

For example buying any resourced based country (Australia or Canada) against the US dollar on a Forex trade, is very similar to buying gold.

Hope this helps.

 

[stevenmac2]

JonLee,

Thank you - I will take a look at your suggested links.

 

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[max momo]

stevenmac2,

1. No, the percentage will eventually go down. May I suggest you read the prospectus to understand why this is so. The prospectus will describe how the ETF works, and the relationship to the price of gold, the cost of gold, and the Net Asset Value.
2. Yes, more or less. You won't actually own an ounce of gold. You will own a divided interest in a fund. BIG DIFFERENCE.
3. NO. There is no fund which mirrors the price of gold 1:1. That is not a possible situation. These funds make $ by charging you a fee. That is why the share price will always go down, as a ratio to gold.

IAU is the other major ETF.
IAU: The gold ETF from iShares - iShares

There are not 1:1 ETFs, but there are gold pools which perform similar to what I believe is your intent. Again, there are fees associated with this service.

There are leveraged pools (essentially asset-backed margin accounts) with 1:4 or 1:15 ratios (Monex or Comex, respectively).

Hope that helps...

 

[biophase]

2) To buy over/near 1 ounce of Gold, would I want to place an order for 11 shares @ $130 in GLD = $1430 in $GOLD?

11 shares of this fund does not mean you own 1 ounce of gold. It means you own 11 shares of this fund worth whatever the price is.

If you want to own 1 ounce of gold, why don't you just get a coin?