A share of GLD represents 0.1 ounce of gold. In other words, the value of a share of GLD is equal to the value of 0.1 ounce of gold. Gold exchange-traded funds (ETFs) expose traders to movements in the price of gold without having to buy the underlying physical asset. Gold ETFs are usually structured as trusts.
Under this structure, the ETF has a certain number of gold ingots for each ETF share issued. Buying an ETF share means owning part of the gold held by the trust. In other words, by buying GLD stocks, one could benefit from the rise in the price of gold and could lose money as the price of gold falls. These funds are more complex than conventional gold ETFs because they don't physically hold the asset in trust.
This ETF was designed and intended to allow investors to participate in the gold market without having to accept the actual delivery of gold or face other potential barriers, such as custody or transaction costs. In addition to allowing more investors to participate in the gold market, the GLD can also provide a gold investment vehicle that can be used by several funds and pensions that do not have the capacity to invest in physical ingots or physical ingot derivatives. However, it is important to understand that owning physical gold is not the same as owning shares in a paper gold product or derivative. Reverse gold funds have expected negative long-term returns because the price of gold generally rises in a fiat monetary system.
VelocityShares' long gold ETN (UGLD) aims to provide three times the return of the S%26P GSCI Gold ER Index in a single day.