Is gld backed by gold?

Gold exchange-traded funds (ETFs) allow traders to be exposed to movements in the price of gold without having to buy the underlying physical asset. Gold ETFs are usually structured as trusts. According to this structure, the ETF has a certain number of gold bars for each share of the ETF issued. Buying an ETF stock means owning a portion of the gold held by the trust.

The VelocityShares 3x Long Gold ETN (UGLD) aims to offer three times the return of the S%26P GSCI Gold Index ER in a single day. The value of GLD shares is directly related to the value of the gold held by GLD (minus its expenses), and fluctuations in the price of gold could materially and adversely affect investment in stocks. GLD does not generate any income, and since GLD regularly sells gold to pay its current expenses, the amount of gold each share represents will decrease over time to such an extent. In 2004, the launch of the publicly traded fund SPDR Gold Trust, with the ticker symbol GLD, equalized investment conditions in gold by allowing for a less expensive option than buying the physical metal.