An active investor might probably heard the term “SPDR”. If you want to become a profitable investor it is necessary to know the exact definition. SPDR is an acronym that stand for Standard and Poor’s Depository Receipt. SPDR funds are the part of a large group of exchange-traded funds. SPDR funds are managed by State Street Global Advisors and are traded as shares on the New York Stock Exchange. They are intended to reflect the value of the S&P 500 index. Each share is about one tenth of the value of the S&P 500 index. How does all this help the gold investor?
SPDR is the largest of a selection of exchange-traded funds. Among those funds is a fund designed to track the price of gold. This fund is SPDR Gold Trust. It reflects the value of gold on the gold market. The advantage of investing in a fund like this is the ability to give your money the growth and protection it would get from the gold market without actually buying gold bullion. The investor, instead, purchases shares of stock that reflect growth and decline of gold bullion prices. There are a few things that you will encounter when investing in SPDR Gold Trust rather than investing in gold bullion.
When you purchase shares of SPDR Gold Trust, you purchase them through a broker. This broker charges you a commission fee that is a fractional percentage of the total cost of your shares. You are also going to be charged maintenance fees while you own the stock. These fees are usually very small and are therefore inconsequential. Some investors incorrectly think that when they sell their stock for a profit they will only be taxed at the long-term capital gains rate 15%. In actuality, you will be taxed at the same rate you would have been taxed at if you sold actual gold bullion for a profit. This rate fluctuates in the 20% range.
In spite of these extra fees, gold exchange-traded funds are still a good investment for a gold investor. They allow purchasing shares of stock in place of tangible gold, and still receive benefits of owning gold. It is also easier and faster to sell shares of a gold exchange-traded fund like SPDR Gold Trust than to sell gold bullion. SPDR Gold Trust shares can certainly be a part of any gold investor’s portfolio.