Perhaps to the bewilderment of bitcoin proponents, many of whom have been toiling away for approval of a spot U.S. offering for nearly a decade, GLD went from its first filing with the U.S. Securities and Exchange to listing on the New York Stock Exchange in just 18 months. Structured as a grantor trust, GLD hit $1 billion in assets in roughly a week and unlocked demand for gold across the investment spectrum.
The World Gold Council, a consortium of 33 gold-mining companies operating across 45 countries, helped bring many global gold products to life with its focus on standards and provenance, and the industry group is still closely intertwined with GLD, the world's largest gold fund. Joseph Cavatoni, North American market strategist for WGC, also serves as principal executive officer for World Gold Trust Services LLC, the sponsor of GLD and GLDM, the 5-year-old SPDR Gold MiniShares Trust.
What drives the viability of physical gold products, and continues to hinder SEC acceptance of spot bitcoin offerings, is the total market context in which gold operates. Spot gold is supported by a robust futures market. Central banks continue to hold gold reserves. Medical, industrial and jewelry markets create natural demand beyond investment. And, of course, gold bugs are ever-present.
Regulators, however, are not necessarily swayed by the details of the contextual market. They are concerned with what happens on the securities exchanges whose rules they oversee and listings they approve. For exchange-traded products, that means transparent pricing, clear custody, and trading and settlement reliability.
For investors and ETP issuers, their focus is on the liquidity of the underlying asset, the premium or discount of the ETP share price to net asset value, and the trading spreads and volumes that compel market makers and enhance liquidity.
ETPs include exchange-traded notes (debt securities that track the returns of a particular index or asset), exchange-traded funds (which hold equity and debt securities as well as loans, futures, options and cash), and exchange-traded commodities, which hold physical commodities.
"Tight spreads are easily achieved when a product is built the right way," Mr. Cavatoni said. "They give market makers confidence to transact."
Confidence in gold is also backed by millennia of luster, utilization and speculation. Bitcoin, on the other hand, just had its bar mitzvah last year.
It's not that bitcoin and other cryptocurrencies aren't available to anyone who wants to buy. Crypto can be held directly in a digital wallet or bought on an exchange such as Coinbase and Binance. (Last fall's bankruptcy of FTX cast a lot of doubt on such exchanges amid the "crypto winter" of declining asset values and failed companies.)