SPDR Gold MiniShares (GLDM)

People got too confident about the equity and bond markets. They are going to have a 60% drop or more. It may be that the markets are still close to their peak. Only 1.1% has been priced-in for all the Fed funds rate increase for all of 2022 through the end of 2023. But the Fed needs to raise the Fed funds rate up to at least 8%. We are only 1/7th of the way there.

Currently the Fed's policy is hugely stimulative. The inflation-adjusted Fed funds rate is -7.8%. Yes, that is a negative 7.8%. Soon bond investors will wake up and won't buy any long bonds until the valuation are de-rated by at least 50%. Inflation is surging higher and the Fed has not yet gotten serious about acting to pull out their enormous stimulus. We are heading for 14% inflation by year-end. Dire.

GLDM seems to have a very similar structure to GLD. Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. I’ve also verified the following to be true and welcome everyone else to do so:

"Did anyone try calling the GLD number for general inquiries at (866) 320 4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors."

"I remember there was a well documented visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."

Impressive to see that gold is up from the $1,300 per oz. in the 2019 pre-pandemic year and now at $1,850 per oz. That is a huge rate of increase, and recently it is rising further. When the government borrow $3 trillion to distribute to people and prints $9 trillion to provide to the Fed to further devalue to dollar and keep the long term bond yields low, that is fueling the devaluation of the dollar further and pushing gold quite a bit higher. Likely, the Fed is going to present insufficient increases in the Fed funds rate (and keep the Fed funds rate below 3% this year), not removing much of the $9 trillion in bonds on the balance sheet and those will drive inflation much further. Probably, we will see Gold hitting new records beyond $2,100 per oz. this year.

Best Gold ETFs for Q3 2020
BAR, AAAU, and GLDM are the best gold ETFs for Q3 2020
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By JASON FERNANDO
Updated May 13, 2020
Gold is a popular asset among investors wishing to hedge against risks such as inflation, market turbulence, and political unrest. Aside from buying gold bullion directly, another way to gain exposure to gold is by investing in exchange-traded funds (ETFs) that hold gold as their underlying asset. Some investors view ETFs as a relatively liquid and low-cost option for investing in gold compared to alternatives such as buying gold futures contracts or shares of gold mining companies. Still, the price of gold can see big swings, meaning ETFs that track it can also be volatile.

There are currently 9 ETFs focused on tracking the price of gold, excluding leveraged or inverse funds.1 Over the past 12 months, the returns from these ETFs have ranged between 25.2% and 31.8%. Among these ETFs, the best performer for the past year is the GraniteShares Gold Trust (BAR). Below, we’ll take a closer look at each.

SPDR Gold MiniShares Trust (GLDM)
Performance over 1 year: 31.7%
Expense Ratio: 0.18%
Annual Dividend Yield: N/A
3-Month Average Daily Volume: 3,016,730
Assets Under Management: $2,138.3 million
Inception Date: June 25, 2018
Issuing Company: State Street SPDR5
With an expense ratio of 0.18%, the objective of the SPDR Gold MiniShares Trust is to track the spot price of gold, less its expenses. The market price of the trust is intended to track the price of 1/100th of an ounce of gold, with the actual gold bullion owned by the fund being stored in London, UK.8 The fund’s sponsor, State Street SPDR, publishes a weekly update of the total amount of gold bullion which it holds. As of May 12th 2020, its most recent weekly figure was roughly 1,189,000 ounces.9