Filed Pursuant To Rule 433
Registration No. 333-209926
June 27, 2016
SPDR Spotlight: ID6675 CTA Link: http://blog.spdrs.com/post/the-strategic-case-for-investing-in-gold GOLD IN THE AFTERMATH OF BREXIT The importance of diversification has been highlighted by Britain’s vote to exit the EU and offers investors an opportunity to reappraise a strategic allocation to gold. Read Article>>
The Strategic Case for Investing in Gold David B.Mazza- Not Yet Published State Street Glo ba l Advisors’ 2015 Year-End I nvestor Survey fou nd th at a slowdown in US cor porate prof itability, a return of stock market volatil ity and rising geopolitical risks were th e most pressing concerns for Investment. Read more, SHARE THIS BLOG CONTRIBUTING AUTHORS James E. Ross Global Head of SPDR’ ETFs M1chael Arone, CFA Chi ef Investment Strategi st Daniel Farley, CFA 0.
The Strategic Case for Investing in Gold David B. Mazza – FEB 16, 2016 Featured ETFs: GLD State Street Global Advisors’ 2015 Year-End Investor Survey found that a slowdown in US corporate profitability, a return of stock market volatility and rising geopolitical risks were the most pressing concerns for Investment Professionals headed into 2016. Since the start of the year, many of these concerns have materialized and investors have turned to gold in search of portfolio diversification and risk mitigation. Global equity markets began 2016 firmly in a downward trend, with some regions, like Japan and Europe, entering into a bear market.1 The S&P 500® posted its worst January performance since 2009.2 Gold, on the other hand, registered a positive 4% return as volatility dragged most assets lower.3 Turbulent and choppy markets, such as the ones we are witnessing today, present investors with an opportunity to reevaluate the strategic role gold may play in a portfolio. While it may be used tactically during times of elevated inflation or persistent dollar weakness, as we saw after the Federal Reserve’s first quantitative easing program, the role of paramount importance for gold is as a strategic diversifier within portfolios. Gold as a strategic hedge in tumultuous times There’s been no escaping market volatility this year as concerns over China’s slowing
growth and its ability to manage its financial markets have spooked investors. Meanwhile, worries over an oil supply glut continue to weigh on the spot price of crude, increasing worries over rising bankruptcies and defaults in the energy and commodities sector. The chart below demonstrates how gold has performed during similarly tumultuous times, including the Gulf War, the Great Recession and the demise of the bond-trading hedge fund, Long Term Capital Management (LTCM). In five out of seven of the events captured in the chart below, gold ranked as either the best performing or second-best performing asset class. By delivering competitive returns during a number of historically challenging times in the market, gold has provided investors with a source of wealth preservation and a means of moderating the market’s volatility. Source: FactSet, State Street Global Advisors, from 1/1/1979 to 12/31/2013. Notes: Persian Gulf War I: Q3 1990, LTCM: Q3 1998, Dot-com meltdown: Q1 2001, 9/11: Q3 2001, 2002 Recession: Q2/Q3 2002, US Credit Crisis: Q4 2008/Q1 2009, European sovereign debt crisis: Q2 2010. Past performance is no guarantee of future results. Gold is represented by the spot price of gold. Gold’s potential for portfolio diversification While the aim of diversification is to hold a wide array of assets that perform differently from one another under various market conditions, data has suggested that equity markets tend to become more closely correlated during periods of market turbulence. Conversely, gold tends to become less correlated with major asset classes during such periods. Harry Markowitz, the Nobel Prize winning economist, famously called diversification the only free lunch—and gold is one asset with a unique and largely uncorrelated return
pattern when measured relative to other traditional asset classes. The chart below illustrates gold’s low correlation to a wide range of asset classes, including other commodities. Adding a separate standalone allocation to gold has the potential to improve the overall diversification of a portfolio, getting closer to that so-called “free lunch.” Source: SSGA, Bloomberg, as of 12/31/2015. Computed using monthly return data from Dec 1990 to Dec 2015. The correlation coefficient measures the strength and direction of a linear relationship between two variables. It measures the degree to which the deviations of one variable from its mean are related to those of a different variable from its respective mean. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. Diversification does not ensure a profit or guarantee against loss. The takeaway for investors Over the long run, holding 2% to 10% of an investors’ portfolio in gold can improve portfolio performance, according to research cited by the World Gold Council.4 At State Street Global Advisors, we agree that investors should consider a long-term strategic allocation in this range.
Adding a strategic allocation to gold within a diversified portfolio can offer a number of potential benefits, including acting as a potential hedge against stock market volatility, and potentially improving diversification given its low correlation with traditional asset classes and other commodities. Gold ETFs, such as SPDR® Gold Shares [GLD®], can provide investors with the potential benefits of owning gold without the added costs and logistics of physical ownership. Gold ETFs are designed to precisely track the spot price of gold, providing investors with pure exposure to the yellow metal and a way to directly express their views on the gold market. With GLD, investors can readily integrate and measure gold as a strategic presence in a portfolio that diversifies risk and fits cleanly into a broad asset-allocation framework of investing. 1Bloomberg, as of 1/29/2016 2Bloomberg, as of 1/29/2016 3Bloomberg, as of 1/29/2016 4J.P. Morgan, “Gold in asset allocation”, July 2012; Mercer, “Gold as an asset class for institutional investors”, February 2011; New Frontier Advisors, “Gold as a strategic asset”, September 2006; World Gold Council, “Gold: hedging against tail risk”, October 2010; World Gold Council, “Gold: alternative investment foundation asset”; New Frontier Advisors, “Gold as a strategic asset for European investors”; World Gold Council, “Gold as a strategic asset for UK investors”, July 2012. Investing in commodities entails significant risk and is not appropriate for all investors. Important Information Relating to SPDR Gold Trust: The SPDR Gold Trust (“GLD®”) has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents GLD has filed with the SEC for more complete information about GLD and this offering. You may get these documents for free by visiting EDGAR on the SEC website at sec.gov or by visiting spdrgoldshares.com. Alternatively, the Trust or any authorized participant will arrange to send you the prospectus if
you request it by calling 866.320.4053. GLD is not an investment company registered under the Investment
Company Act of 1940 (the “1940 Act”) and is not subject to regulation under the Commodity Exchange Act of 1936 (the “CEA”). As a result, shareholders of the Trust do not have the protections associated with ownership of shares in
an investment company registered under the 1940 Act or the protections afforded by the CEA. GLD shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of GLD shares relates directly to the value of the
gold held by GLD (less its expenses), and fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the
value of the gold represented by them. GLD does not generate any income, and as GLD regularly sells gold to pay for its ongoing expenses, the amount of gold represented by each Share will decline over time. Investing involves risk, and you could
lose money on an investment in GLD. Please see the GLD prospectus for a detailed discussion of the risks of investing in GLD shares. The GLD prospectus is available by clicking here. More on The Markets » More by David B. Mazza » Share
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Industry funds are also subject to industry risk and non-diversification risk, which generally results in greater price fluctuations than the overall market. Because of their narrow focus, sector investing tends to be more volatile than investments that diversify across many sectors and companies. The use of leverage, as part of the investment process, can multiply market movements into greater changes in an investment’s value, thus resulting in increased volatility of returns. Securities lending programs and the subsequent reinvestment of the posted collateral are subject to a number of risks, including the risk that the value of the investments held in the collateral may decline in value and may at any point be worth less than the original cost of that investment. Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs. Passive management and the creation/redemption process can help minimize capital gains distributions. Although subject to the risks of common stocks, low volatility stocks are seen as having a lower risk profile than the overall markets. However, a portfolio comprised of low volatility stocks may not produce investment exposure that has lower variability to changes in such stocks’ price levels. A “quality” style of investing emphasizes companies with high returns, stable earnings, and low financial leverage. This style of investing is subject to the risk that the past performance of these companies does not continue or that the returns on “quality” equity securities are less than returns on other styles of investing or the overall stock market. Commodity funds may be subject to greater volatility than investments in traditional securities. Investments in commodities may be affected by overall market movements, changes in interest rates, and other factors, such as weather, disease, embargoes, and international economic and political developments. REIT funds may be subject to a high degree of market risk due to lack of industry diversification. REIT funds may be subject to other risks including, but not limited to, changes in real estate values or economic conditions, credit risk and interest rate fluctuations and changes in the value of the underlying property owned by the trust and defaults by borrowers. Actively managed ETFs do not seek to replicate the performance of a specified index. ETFs typically invest by sampling an index, holding a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index. 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Standard & Poor’s, S&P and SPDR are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation’s financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index. Important Information Relating to SPDR Gold Trust: Investing involves risk, and you could lose money on an investment in GLD. Please see the GLD prospectus for a detailed discussion of the risks of investing in GLD shares. The GLD prospectus is available by clicking here. GLD shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of GLD shares relates directly to the value of the gold held by GLD (less its expenses), and fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the gold represented by them. GLD does not generate any income, and as GLD regularly sells gold to pay for its ongoing expenses, the amount of gold represented by each Share will decline over time. Distributor: State Street Global Markets, LLC, member FINRA, SIPC, a wholly owned subsidiary of State Street Corporation. References to State Street may include State Street Corporation and its affiliates. Certain State Street affiliates provide services and receive fees from the SPDR ETFs. 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SPDR® GOLD TRUST has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the Trust and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the Trust or any Authorized Participant will arrange to send you the prospectus if you request it by calling toll free at 1-866-320-4053 or contacting State Street Global Markets, LLC, One Lincoln Street, Attn: SPDR® Gold Shares, 30th Floor, Boston, MA 02111.