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« Obama Has No Clothes | Main | Gold Prices Hit $1000 »

SPDR Gold Trust (ETF) A Safe Haven?

SPDR Gold Shares

This gold fund currently has a market capitalization of $27.00 billion, but does it really have the physical gold it reports to have or is it some form of paper equivalent?

We decided to ask them directly and found that their answers to be somewhat surprising.

14 February 2009
Dear Sirs,

We host a web site called where we have 6781 subscribers and up to 35,000 casual visitors on a daily basis.

Our readers have noted that your fund acquired another 45 tons of gold last month, which is a fantastic achievement, as your fund goes from strength to strength.

However two questions pop up:

1.Who sold the 45 tons of gold to you?
2.How can we prove to our readers that you actually have the metal and not the paper equivalent.

If you could provide us with an explanation that we could post on our web sites then it would give our readers and us for that matter the confidence to invest in GLD.

Best wishes,

Bob Kirtley

14 February 2009
Please see pages 25-29 in the GLD prospectus (Creation and Redemption of Shares section) for more insight about transactions that occur with Authorized Participants at:

14 February 2009

Thank you for your very prompt reply it is much appreciated. However your reference to pages 25-29 of the prospectus covers regulations in a general sense but you have not answered the two questions that we have tabled. So could you please provide us with answers to these two questions?

1.      Who sold the 45 tons of gold to you?
2.      How can we prove to our readers that you actually have the metal and not the paper equivalent.

Best wishes,

Bob Kirtley

14 February 2009
The Authorized Participants buys the gold, not the Trust. The section I referred to deals with Creation and Redemption of shares. This is important in understanding where the gold comes from and how the fund actually operates. We are currently working on a piece that addresses this issue and it will be posted on the website.

14 February 2009

The questions still stand, which Authorized Participants bought the 45 tons of gold and who did they but it off?

Who audits each of these Participants holding of physical gold and provides the proof that they actually have the gold?

Best wishes,

Bob Kirtley

17 February 2009

Is there anything else that you would like to add before we go to press?

Best wishes,
Bob Kirtley

18 February 2009
As far as “proof” that we actually hold physical gold; you can visit the website and download a copy of the gold bar list which numbers each gold bar. Moreover, page 26 of the prospectus lists all the Authorized Participants. Where they attained the gold is something I cannot answer.

We draw your attention to the very last sentence – they do not know where they attained the gold!

This statement gives us cause for concern, with such big numbers involved we would have thought that an approximate breakdown of who has supplied them with the gold would have been readily available. There should be in existence an audit trail which accounts for every bar of gold and then when a purchase of say 10 tonnes is made we could all see who the seller was and get some validation of the transaction.

In conclusion this is just too vague for us and we are not comfortable at this juncture with SPDR Gold Trust as an investment vehicle. For disclosure purposes we do not own this stock, however we have traded their options in the past.

SPDR Gold Trust trades on the NYSE under the symbol of GLD, has a market capitalization of $27.47 billion with 280.90 million shares outstanding and the average volume of shares traded is 19.74 million.

We will however attach any further comments the company wishes to make to this article as it is only fair to do so.

Got a comment, then fire it in.

Stay tuned folks..

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Reader Comments (57)

It is important to know where they keep the gold. There is a risk of expropriation of gold if everyone starts to hoard it.

March 19, 2009 | Unregistered CommenterStan

Just because they say "I cannot answer" doesn't mean that he does not know! Maybe it is policy not to disclose this, or maybe they purchased it under the caveat that it not be disclosed, or maybe they bought it from some unsavory individuals... an answer in the middle of the spectrum (speculation), say they bought it from the government of Dubai, who is cash strapped in a big way right now. Maybe Dubai dumped their gold holdings but don't want to cause a panic in domestic RE prices etc. Just one of may possible scenarios.

March 22, 2009 | Unregistered CommenterGeorge

Just a thought - looks like whatever e-mail address you sent this into chose some guy, I'm guessing a marketing/media affairs guy (generally not the brightest bulbs), and assigned him to respond to your e-mail. Maybe your readership numbers didn't impress him or his company, and they thought you were too much of a pissant to spend any of there time responding to. Maybe sending repeated niggling e-mails isn't the best way to unwrap the mechanisms behind this ETF's purchases. Just a thought.

April 26, 2009 | Unregistered CommenterNick

If they have the serial number of each bar....why do you care where it came from? How can they have the serial numbers and "not" have the gold?

April 5, 2011 | Unregistered CommenterBrad

GLD say, "“proof” that we actually hold physical gold; you can visit the website and download a copy of the gold bar list which numbers each gold bar. Moreover, page 26 of the prospectus lists all the Authorized Participants. Where they attained the gold is something I cannot answer.""

If the authorized participant provides the gold, how "could" GLD know where it was obtained from?

Without meaning to be rude, this appears to be an attack piece and is without merit.

April 5, 2011 | Unregistered CommenterBrad


Yes can look at a list of bar numbers and I can say Oh, look theres my bars and across the other side of the world you are saying the same thing. The same bar could appear on more than one statement and without a proper audit we have no way of knowing.

You can argue that this has been audited, but so was Enron and Bernie Madoff. There is also the third party risk involving other banks, a sector which hasn't been exactly stable of late.

April 6, 2011 | Unregistered CommenterGold Prices

Brad -- there have been duplicate serial numbers on the same list as well.. I wouldn't trust them to be telling the truth as far as I could throw one 100oz good delivery bar.

April 6, 2011 | Unregistered CommenterKen

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