Wednesday, September 17, 2008
The SPDR Gold Shares ETF (NYSE:GLD) inventory increased by 36.5 tonnes today, an event that was probably related to the $85 increase in the price of the metal. This was the second biggest one-day addition, behind only the July 11th purchase a few months back.
Prior to today's addition, there had been a 92 tonne net decrease in inventory since that July 11th increase, with gold exiting the trust as recently as last Tuesday (11 tonnes) and Wednesday (16 tonnes).
As is the case for stock funds, when there is more demand for shares than currently exist, the fund must create new shares. As part of the process, instead of going out and buying stock to be placed in the fund, gold bullion is purchased and placed in the trust.
Sometimes it's funny to think that the gold and silver ETFs are being hailed as innovations here in the 2000s, just as stock mutual funds were lauded in the 1980s and 1990s .
That's real progress.