Gold had a great run in 2009, rising 25 percent over the year based on global uneasiness about the economic recovery, a tanking U.S. dollar and the specter of inflation. The first and largest gold ETF, the SPDR Gold Trust (NYSE Arca: GLD), had a big year too: The fund took in more than $13.8 billion in new investment in 2009, ending the year at $40.2 billion in assets—putting it second only to the SPDR S&P 500 ETF (NYSE Arca: SPY).

But can the incredible growth continue? After such a banner year in 2009, where does the yellow metal—and its biggest ETF—go from here?

We asked man-on-the-inside Jim Ross, senior managing director at State Street Global Advisors, the company behind GLD and other SPDR funds. Ross is also the president of SSgA Funds Management Inc., where he's involved in product development, marketing and product management for SSgA's investment strategies.

At the recent Inside ETFs Conference, HAI associate editor Lara Crigger chatted with Ross about gold and GLD, including what gold's fundamentals look like for 2010, what's behind the 0.40 percent expense ratio and whether GLD moves the gold market.

Lara Crigger, associate editor, HardAssetsInvestor.com (Crigger): So how do you see the fundamentals for gold shaping up for 2010?

Jim Ross, senior managing director, SSgA (Ross): While I'm not the best to predict the price of gold, I think if you look at the underlying fundamentals driving gold, they're still there. Investment demand, concerns about the U.S. dollar, concerns about inflation and even concerns, to a certain extent, about the world: peace, safety—all those things have historically driven the price of gold. And they've driven it higher, too.

I think the case has been made that gold is a noncorrelated asset, and it needs to be a part of your portfolio for the long term. But I think what we've seen last year, and what we'll continue to see go up and down is the tactical overweight to gold, because of some of those fundamentals.

Crigger: Do you think the economic recovery is strong enough now that we're going to start seeing a recovery in the dollar, and perhaps a slowdown or even a turnaround in gold as a result?

Ross: Well, remember, that that's just one driver of the gold price. All the other things tied into supply and demand will push the price of gold. I look at gold more along the lines of: Does it belong in your portfolio? Is it helping people diversify their overall portfolio? You look at 2008, when equities, broadly speaking, were down 40 percent in that last quarter. And gold was up. It just shows that its noncorrelating factors work.

And that's not always going to be the case. There's going to be times when the U.S. equity markets go flying up, and gold's going to go down, because that negative correlation will still hold then too. But it's always driven by different factors. That's the key from a portfolio standpoint.

Crigger: Gold production has slowed down in recent months. How will that affect the picture?

Ross: That's a key point. Gold production's not increasing right now. That leads me to believe that price could stay up there. It's at a high price now, and we could see it go higher at the end of the year, but it's going to be a bumpy ride.

Crigger: So why purchase a gold ETF, versus buying coins or the bullion itself?

Ross: Most investors can't buy the bullion themselves, because it's too expensive. Most people can't access physical bullion, and they can't access gold futures contracts. What GLD really did when we brought it to market is that it gave people low-cost, efficient access to the gold price. That just didn't exist five years ago. It "democratized" the ability to invest in gold, which you know is kind of the basis of ETFs as a whole. It helped solve investment advisers' concerns about how to access gold in a simple way.

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