The Rise of Gold ETFs in Modern Investing

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GOLD ETF


Gold Exchange Traded Fund is a financial product that is listed on a stock exchange and represents ownership of underlying gold assets.

Gold ETF can allow investors to easily participate in the gold market and the basic investment objective is designed to offer investors a simple, cost-efficient, and secure way to access the gold market by providing a return equivalent to movements in the gold spot price less the relevant management fees.

Gold Exchange Traded Funds (ETFs) are simple investment products that combine the flexibility of stock investment and the simplicity of gold investments. ETFs trade on the cash market of the National Stock Exchange, like any other company stock, and can be bought and sold continuously at market prices.
Gold ETFs are passive investment instruments that are based on gold prices and invest in gold bullion. Because of its direct gold pricing, there is complete transparency on the holdings of an ETF. Further due to its unique structure and creation mechanism, the ETFs have much lower expenses as compared to physical gold investments.

Advantage

Diversification: Considered as an excellent diversification for your portfolio.
Liquidity : Since it trades like a share, buying and selling happens quickly and therefore it is highly liquid.
Safety : Gold ETF ensures that the custody and quality of gold is consistent.
Security : All transactions happen in electronic mode, so there is no risk in case of unforeseen circumstances.
Lower Cost : The expenses incurred in buying and selling Gold ETF are much lower then the cost incurred in buying, selling, storing and insuring physical gold.
Making Charges : You don’t have to pay any making or delivery charges.

Features of Gold ETF 

Potentially cheaper to have price exposure to gold price as compared to other available avenues
Quick and convenient dealing through a Demat account
No storage and security issue for investors
Transparent pricing
Can be traded on stock exchange like buying / selling a stock
Ideal for retail investor as minimum lot size to trade is one unit on secondary market

Why to Invest in Gold ETF


Gold ETFs are transparent vehicles and provide an effective and efficient platform for small investors to diversify into GOLD.

Gold is considered as a Global Asset Class and there are various reasons why GOLD ETF is a must in retail investor's portfolios, and why they are better than traditional forms of investing in Gold.

  • No worry about adulteration or impurities
  • Held in Electronic Form
  • Can track your investment values in real time
  • Extremely Liquid

The expenses incurred in buying and selling Gold ETF are much lower than the cost incurred in buying, selling, storing, and insuring physical gold. 

How to Invest in Gold ETF

To Invest in Gold ETFs, all you need to have is a demat account and a trading account with an online account for trading stock, which would suffice to invest in gold ETFs.

Once you have got the account ready it’s just a matter of choosing Gold ETF and placing the order online from your broker’s trading portal. The orders are routed to the exchange where the purchase orders are matched with the sell orders and executed and a confirmation will be sent back to you.

Following are the documents required to open a demat and trading account

  • PAN card (Mandatory)
  • Identity proof
  • Address proof
  • Aadhar Card
  • Cheque Photo
  • Nominee Name
  • Mobile Number
  • Email ID

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