World Gold Council, SSGA launch gold ETF designed for a strong US dollar environment
GLDW designed to help investors access the potential benefits of gold and counter the historically negative correlation between a strengthening US dollar and gold prices
The World Gold Council, the market development organization for the gold industry and State Street Global Advisors (SSGA), the asset management business of State Street Corporation (NYSE:STT) through its affiliate, State Street Global Markets, LLC, the marketing agent for GLDW, today announced that the SPDR® Long Dollar Gold Trust (GLDW) began trading 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,” said 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 realize 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 December 31, 2013, to December 30, 2016, three years of persistent dollar strength, gold priced in USD fell from $1,205/oz to $1,146/oz, a 5 percent decline. However, when the effect of a strengthening USD is removed, gold priced in non-US currencies, such as the Euro, increased from €873/oz to €1,096/oz, a 25 percent 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 subcustodian 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 U.S. dollar,” said 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.”
In November 2004, the World Gold Council through a US subsidiary and State Street Global Advisors launched SPDR® Gold Shares (GLD®), the first US traded gold ETF and the first US-listed ETF backed by a physical asset. GLD® attracted more than $1 billion in assets in its first three trading days. Listed on the NYSE Arca, in addition to exchanges in Singapore, Tokyo, Hong Kong and Mexico, GLD® remains the largest gold ETF with approximately $30.6 billion in assets under management backed by physical gold bullion.
The net and gross expense ratio for GLDW is 0.50 percent.
About State Street Global Advisors
For nearly four decades, State Street Global Advisors has been committed to helping financial professionals and those who rely on them achieve their investment objectives. We partner with institutions and financial professionals to help them reach their goals through a rigorous, research-driven process spanning both active and index disciplines. We take pride in working closely with our clients to develop precise investment strategies, including our pioneering family of SPDR ETFs. With trillions* in assets under management, our scale and global footprint provide access to markets and asset classes, and allow us to deliver expert insights and investment solutions.
State Street Global Advisors is the investment management arm of State Street Corporation.
*Assets under management were $2.4 trillion as of December 31, 2016. *AUM includes the assets of the SPDR® Gold ETF (approximately $30.6 billion as of December 31, 2016), for which State Street Global Markets, LLC, an affiliate of SSgA, serves as the distribution agent.
About World Gold Council
The World Gold Council is the market development organisation for the gold industry. Our purpose is to stimulate and sustain demand for gold, provide industry leadership and be the global authority on the gold market. We focus on policy-related issues, market infrastructure, central banks and investment markets.
We develop gold-backed solutions, together with industry partners, that create structural shifts in demand across key market sectors. We provide insights into the international gold markets, helping people to understand the wealth preservation qualities of gold.
The membership of the World Gold Council includes the world’s leading and most forward thinking gold mining companies.
 Source: Bloomberg Finance L.P., SSGA.
 The currency basket of GLDW is comprised of the euro, Japanese yen, British pound, Canadian Dollar, Swedish krona and Swiss franc.
 Bloomberg as of 12/31/16