GLDM ETF: Guide to Trading SPDR Gold MiniShares Trust

If you know about ETFs, you may already be aware of multiple examples of gold ETFs. One excellent option to explore is the SPDR Gold Minishares Trust ETF (“GLDM”). 

This article delves into GLDM’s history, its relationship to SPDR Gold Shares (GLD), and how it works. Read on for that and more.

What Is SPDR Gold MiniShares ETF (GLDM)

SPDR Gold MiniShare or GLDM is a US-listed ETF that tracks the price performance of gold bullion after the deduction of operations. GLDM was first listed on the NYSE Arca on 26 June 2018, and is a product launched and managed by the World Gold Council USA Asset Management Company LLC ^[1].

A share of GLDM represents fractional but undivided and beneficial ownership of the gold bullion deposits held by the ETF. It has a lower price per share, allowing investors with a minimum capital to invest in it.

Short History of GLDM ETF

The SPDR Gold Minishares ETF was launched on 26 June 2018, by the World Gold Council and State Street Global Advisors. Its goal is to offer the lowest total expense ratio among gold ETF products, which allows investors to diversify their risk at the lowest possible cost ^[2].

The GLDM ETF was the third product launched by WGC and State Street, which also launched the SPDR Gold Shares ETF (GLD) in November 2004 as the first US-traded gold ETF, and the first US ETF backed by a physical asset.

These two companies also launched the SPDR Long Dollar Gold Trust in January 2017 as the first US-listed gold ETF designed to combine long positions in physical gold and long dollar positions against a basket of 6 non-US currencies. This ETF helps investors enjoy potential benefits from gold even when the dollar has a strong market performance.

ICBC Standard Bank in London is the custodian of GLDM’s gold holdings. Each GLDM share represents the price of 1/100th of an ounce of gold, with an expense ratio of 0.18% at launch.

At the time of publication, GLDM had about USD$4.7 billion of assets under management.

How the GLDM ETF Works

As stated above, the SPDR Gold Minishare ETF is a relatively transparent and efficient way to track the price of gold bullion, especially if you’re a buy-and-hold investor. It is a cheaper way of investing in gold compared to other ETFs ^[3]. 

Moreover, paying GLDM’s ongoing expenses and trading fees in a secondary market is much cheaper than trading, storing, and insuring gold bullion itself.

For trading GLDM ETF, you’ll now pay an expense ratio of about 0.10%, down from 0.18% at launch. What does that mean? For every USD$10,000 invested in GLDM, you’ll pay a $10 fee to the fund manager ^[4].

GLDM uses the gold price of the London Bullion Market Association (LBMA) as its benchmark. Moreover, GLDM is structured as a grantor trust, providing investors with a certain degree of tax protection, making it even more efficient for investors.

The Relationship Between GLD and GLDM

There is a direct relationship between GLDM and GLD, which is worth looking at. From what we know, both GLDM and GLD are products of the partnership between the World Gold Council and State Street Global Advisors. Also, both ETFs track LBMA gold prices. 

But are there any noteworthy differences between the two? Let’s explore this further. 

Differences 

• One GLD share represents the price of 1/10th of an ounce of physical gold. GLDM represents 1/100th. That makes ownership of GLD shares more expensive than GLDM shares
• GLD has an expense ratio of about 0.40%, compared to GLDM’s 0.10%. You pay lower trust fees buying GLDM shares.
• GLD has more assets under management, at US$ 49 billion, against GLDM’s US$ 4.74 billion.
• HSBC bank is the custodian of GLD’s gold. In GLDM’s case, it’s the ICBC Standard Bank.

Due to the identical fundamental nature of both ETFs, their price movements have a strong positive correlation.

GLDM Holdings

GLDM solely holds gold bullion with ICBC Standard Bank in London as the sole custodian. These gold assets are currently worth over USD$ 4.7 billion ^[5].

Why Trade GLDM? 

What are the potential benefits and risks of trading SPDR Gold Minishares (GLDM) ^[6]?

Benefits

• Compared to other gold ETFs, GLDM has one of the lowest expense ratios at just 0.10%
• GLDM can diversify your portfolio and potentially provide a hedge against inflation
• In the case of GLDM, you have an interest in the underlying gold bullion
• GLDM is a cost-effective way to invest in gold.

Risks

• Sudden price fluctuations can have a material impact on the prices of the ETF shares
• Selling gold bullion to cover trading expenses at times of low gold prices also hurts the cost of gold.
• Sale of ETF shares held for more than a year by US investors is subject to federal income tax. 

Where and How to Trade GLDM

Interested in investing in the GLDM ETF CFD? Here’s how to go about it:

1. Find and Choose a Broker

You need a broker to access a trading platform and the ETF markets. Here are some things to look out for when selecting the best broker for your investments:

The ideal broker will be:

• A user-friendly trading platform with plenty of features and access to multiple global markets
• Regulated by credible financial authorities such as the FCA, SEBI, SEC or ASIC
• With clear terms and conditions, transparent trading fee and cost structure
• Responsive, with multilingual customer support available to you 24/5
• Outstanding order execution speeds

2. Open a Trading Account or a Demo Account

Once you identify an ideal broker, open a trading account on their platform. Alternatively, start with a demo account and test how it works. You can also simulate demo trades until you understand how it works and master your strategies.

3. Find GLDM

Once you have a strategy that gives you consistent results in your demo account, Find the GLDM ETF on your broker’s platform. Add it to your watchlist.

4. Fund Your Account 

Next is to add real money to your brokerage account. You can do it in several ways, including a debit or credit card, direct bank transfers, or wire transfers. Many brokers accept electronic payments, and you can use accounts like PayPal or Skrill.

5. Evaluate the ETF

Test out the health of GLDM ETF before picking it. Check out the fundamentals of the ETF and ensure it offers maximum exposure to the market movements. 

6. Purchase the ETF

With a funded margin account with your broker, wait for markets to open, and buy the ETF of your choice. 

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