GLD’s glorious past decade may not be a prologue for its future.
The SPDR Gold Trust (GLD | A-100) is turning 10 years old today, and it remains as important now as it was the day it first came to market.
Its 10-year history tells a story of a fund that democratized access to gold, and propelled commodity investing into the mainstream. GLD was the most successful ETF launch ever, gathering $1 billion in assets in less than a week. But the gold rally that it rode to glory for much of its first decade seems to be over, and competing ideas are clouding the future of this groundbreaking ETF.
Since its launch as the first physical gold ETF in 2004, more than 150 commodity ETFs have followed, and today, commodity ETFs boast more than $100 billion in combined assets. That’s a solid footprint that was nonexistent 10 years ago.
“It’s transformed the way people think about gold and investing in gold,” World Gold Trust’s CEO Will Rhind told ETF.com. “It also opened the door for investing in commodities more broadly as an asset class, which has become a key portfolio component over the last 10 years.”
As Rick Rule, founder of Sprott Global Resource Investments, puts it, “The best judgment of a product’s utility to the market is the market’s acceptance of the product, and the market’s acceptance of GLD is extraordinary.”
Indeed, GLD was the first physical gold ETF. It’s the biggest and it’s astonishingly liquid, trading about $825 million on average every single day, with a penny-wide spread.
But GLD, which briefly was the biggest ETF in the world, is now barely clinging to the No. 8 spot in ETF.com’s ranking of the Biggest ETFs. For a very brief stint in August 2011, the fund actually managed to outrank the SPDR S&P 500 ETF (SPY | A-98) as the biggest ETF in the world. It had more than $76 billion in assets at the time, almost three times the $26.7 billion it has now.