A History of Gold-Backed ETFs: From SPDR Gold Shares (GLD) to the Present

Binance CEO Changpeng Zhao (CZ) ignited a discussion on the history of gold-backed ETFs on Twitter, piquing interest in these investment vehicles among crypto

Gold ETFs first emerged in 2004 with the launch of SPDR Gold Shares (GLD), offering a new avenue for investors to gain exposure to gold in a more accessible and liquid format. This ETF quickly attracted attention, gathering over $1 billion in inflows within a short period after its launch.

GLD's entry into the market marked a significant shift in the investment landscape, providing a more convenient and cost-effective way to invest in gold compared to buying physical gold or futures contracts. The ETF's performance was closely linked to the price of gold, rising and falling in tandem.

During a surge in gold prices in 2011, GLD briefly became the world's largest ETF by total value, surpassing even the SPDR S&P 500 ETF. This event highlighted the appeal of gold as a hedge against market volatility and economic uncertainties during that period.

GLD's success and the increasing demand for gold ETFs spurred the entry of more gold-backed ETFs into the U.S. market. By mid-2021, there were 11 additional gold ETFs available in the U.S., catering to a broader range of investment strategies and risk profiles.

Globally, the landscape for gold ETFs is even broader, with over 90 active gold-backed ETFs. These ETFs are structured differently, with some offering synthetic exposure, while others are directly linked to physical gold, catering to demand for both types of investments.

Overall, the expansion of gold ETFs in response to increasing investor demand and the shifting market landscape has created a diverse and competitive market for gold-backed ETFs.

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