Here are some frequently asked questions about streetTRACKS Gold Shares.
Click on the links to jump to the answers in the page or download the
complete list of questions and answers as a .pdf
file (
550kb)
1. Can you take physical possession of the gold?
2. Is the gold insured?
3. Where is the gold held? Is it safe?
4. What happens to the gold if there is a terrorist attack and it is
stolen or damaged?
5. How is GLD treated from a tax standpoint?
6. Where do you get the spot price for gold?
7. How do I find the intra-day NAV of GLD?
8. How often is the trust audited, & do the auditors
have access to the vault to physically count the gold?
1. Can you take physical possession of the gold?
The Trustee, Bank
of New York, does not deal directly with the public. The trust handles
creation and redemption orders for the shares with
Authorized
Participants, who deal in blocks of 100,000 shares. An individual
investor wishing to exchange shares for physical gold would have to come
to the
appropriate arrangements with his or her broker.
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2. Is the gold insured?
The Custodian, HSBC Bank USA, will maintain such insurance for its
business, including its bullion and custody business, as it deems appropriate.
The Trustee and the Sponsor, WGTS, may review this insurance coverage
periodically and upon notice, subject to confidentiality restrictions.
The Custodian is responsible for the safekeeping of the gold held on
behalf of the Trust in accordance with the terms of the Allocated Bullion
Account Agreement and is required to exercise reasonable care in the
performance of its obligations. The Custodian is responsible for loss
or damage suffered by the Trust as a direct result of any negligence,
fraud, or willful default in the performance of its duties. The Custodian’s
liability is only for the market value of the gold held in the Trust
Allocated Account or Trust Unallocated Account, respectively, at the
time such negligence, fraud or willful default is discovered by the
Custodian, provided that the Custodian notifies the Trustee promptly
of its discovery.
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3. Where is the gold held? Is it safe?
The gold that underlies Gold Shares is held in the form of allocated
400 oz. London Good Delivery Bars in the London vaults of HSBC Bank
USA. The safekeeping methods are essentially no different
from those that have operated without a problem in the London market
for centuries. Those safeguards have
stood the test of time for both individuals and institutions (including
many governments) that store their gold in London vaults. We have tremendous
confidence in the Custodian's efforts to ensure the safety of the
Trust's gold bullion.
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4. What happens to the gold if there is a terrorist attack and it
is stolen or damaged?
Though damage or loss as a result of such events
is unlikely, should the gold be destroyed or damaged in a
terrorist attack, the Custodian is not liable for any delay in performance
or non-performance of any of its obligations under the Custody Agreements.
See "Force Majeure" section of the prospectus. Should the gold
in the Trust Allocated Account or Trust Unallocated Account be stolen or damaged, the Custodian would only
be liable for the market value of the gold held in the Trust Allocated Account or Trust Unallocated Account if
it were determined that such loss or damage were the result of negligence, fraud or willful default. These are
the legal considerations governing the operations of the Custodian. Actual experience in the aftermath of the
terrorist attack that destroyed the World Trade Center in New York was that there was effectively no disruption
to the operations of a custodian whose vault was unavailable for months, until it was eventually recovered
undamaged. The Custodian was able to carry on more or less normal operations by using gold deposited at
other locations, or by borrowing gold in the market, and did not have to default on a single transaction.
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5. How is GLD treated from a tax standpoint?
The United States Internal Revenue Service (IRS) treats gold as a collectible
for long-term capital gains tax purposes. As such, gains recognized
by individuals from the sale of streetTRACKS Gold Shares are subject to
a capital gains rate of 28% if held for more than one year. This rule extends to all gold held by the Trust.
Although there are some restrictions applicable to retirement plans such as IRAs and 401ks investing in collectibles,
streetTRACKS Gold Shares received a private letter ruling permitting investment
by such retirement plans.
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6. Where do you get the spot price for gold?
How does it relate to
the London AM/PM Fix? What is the difference between the London Fix
and COMEX?
The spot price for gold is determined by market forces in the 24-hour
global over-the-counter (OTC) market for gold. The OTC market accounts
for most global gold trading, and prices quoted reflect the information
available to the market at any given time. The spot price can be found
on: www.thebulliondesk.com.
The London Bullion Market Association has about 60 full members, as
well as a lot of associates. The London Fix is set by five of those
member firms and is based upon actual buy and sell orders for gold
in the global
OTC market. A good analogy for the London Fix versus OTC trading would
be to consider the London Fixes similar to opening/closing prices for
stocks and to consider the spot price for gold as the continuous market
price throughout the trading day.
The COMEX division of the New York Merantile Exchange is a derivatives
exchange that acts as a marketplace to trade futures and options contracts
on metals, including gold. Typically, gold futures contracts trade
at a
premium to the spot price.
Further discussion can be found in the prospectus.
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7. How do I find the intra-day NAV of GLD?
The indicative intra-day NAV of GLD can be found at www.streettracksgoldshares.com.
The indicative intra-day value is calculated on the mid point of the
bid/offer gold spot price.
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8. How often is the trust audited, and do the auditors have access
to the vault to physically count the gold?
Agreements among the Trustee, Bank of New York and the Custodian, HSBC
USA, NA allow for the Trustees to visit and inspect the Trust’s
holdings of gold held by the custodian twice a year. In addition, The
Trust’s independent auditors may audit the Gold holdings in the
vault as part of their audit of the Financial Statements of the Trust.
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For more information: State Street Global Markets, LLC, One Lincoln
Street, Boston, MA 02111 « 866.320.4053 « www.streettracksgoldshares.com
This material must be delivered with a prospectus. The prospectus contains material information about the Trust and its Shares which is material and/or which may be important
to you. You should read the entire prospectus, including "Risk Factors&before; making an investment decision about the Shares.
Statement Regarding Forward-Looking Statements
This prospectus includes "forward-looking statements" which generally relate to future events or future performance. In some cases, you can identify forward-looking statements
by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or the negative of these terms or other comparable
terminology. All statements (other than statements of historical fact) included in this prospectus that address activities, events or developments that will or may occur in the
future, including such matters as changes in commodity prices and market conditions (for gold and the Shares), the Trust's operations, the Sponsor's plans and references to the
Trust's future success and other similar matters are forward-looking statements. Investors are cautioned that these statements are only projections. Actual events or results
may differ materially. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and
expected future developments, as well as other factors believed appropriate in the circumstances. Whether or not actual results and developments will conform to the
Sponsor's expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to fluctuations in the price of gold; reductions in the
amount of gold represented by each Share due to the payment of Trust expenses and the impact of the termination of the fee reduction under the Trust Indenture; purchasing
activity in the gold market associated with the purchase of Baskets from the Trust; the lack of experience of the Sponsor and its management in operating an investment vehicle
such as the Trust; unanticipated operational or trading problems; the lack of protections associated with ownership of shares in an investment company registered under the
Investment Company Act of 1940 or the protections afforded by the Commodity Exchange Act of 1936; the lack of a market for the Shares; the level of support from the
World Gold Council; competition from other methods of investing in gold; the impact of large-scale distress sales of gold in times of crisis; the impact of substantial sales of
gold by the official sector; the effect of a widening of interest rate differentials between the cost of money and the cost of gold; the loss, damage, theft or restrictions on
access to the Trust's gold; the lack of adequate sources of recovery if the Trust's gold is lost, damaged, stolen or destroyed, including a lack of insurance; the failure of gold bullion
allocated to the Trust to meet the London Good Delivery Standards; the failure of sub-custodians to exercise due care in the safekeeping of the Trust's gold; the limited
ability of the Trustee and the Custodian to take legal action against sub-custodians; the insolvency of the Custodian; the Trust's obligation to reimburse the Purchaser and the
Market Agent for certain liabilities in the event the Sponsor fails to indemnify them; competing claims over ownership of intellectual property rights related to the Trust; and
other factors identified in the "Risk Factors" section of the Prospectus filed with the SEC and in other filings made by the Trust from time to time with the SEC. Consequently,
all the forward-looking statements made in this material are qualified by these cautionary statements, and there can be no assurance that the actual results or developments
the Sponsor or Marketing Agent anticipates will be realized or, even if substantially realized, that they will result in the expected consequences to, or have the expected effects
on, the Trust's operations or the value of the Shares. Neither the Sponsor, Marketing Agent nor any other person assumes responsibility for the accuracy or completeness of
the forward-looking statements. Neither the Trust, Marketing Agent nor the Sponsor is under a duty to update any of the forward-looking statements to conform such statements
to actual results or to reflect a change in the Sponsor's or Marketing Agent's
expectation or projections. The value of the Shares relates directly to
the value of the gold held by the Trust (less Trust expenses) and fluctuations
in the price of gold could materially adversely
affect an investment in the Shares.
Investors should be aware that there is no assurance that gold will maintain
its long-term value in terms of purchasing power in the future. In the
event
that the price of gold declines, the Sponsor expects the value of an investment
in the Shares to similarly decline.
Shareholders will not have the protections associated with ownership of
shares in an investment company registered under the Investment Company
Act of 1940
or the protections afforded by the Commodity Exchange Act of 1936. The
Trust is not registered as an investment company under the Investment Company
Act
of
1940 and is not required to register under such act. Neither the Sponsor
nor the Trustee is subject to regulation by the CFTC. Shareholders will
not have
the regulatory protections provided to investors in CEA-regulated instruments
or commodity pools.
*Marketed by State Street Global Markets, LLC, an affiliate of State Street
Global Advisors AS.GLD.FS.0605
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