Investment in gold can be in the form of physical gold, sovereign gold bonds, gold ETFs, gold funds. Gold ETFs are basically exchange traded funds that invest in gold. They are listed on the stock exchange and invest directly in gold. Traditionally, festivals and weddings have been the main driving force behind buying gold, and buying yellow metal is considered auspicious.
“Today there are different avenues through which you can invest in gold. Of these, gold ETFs are one of the easiest and most transparent ways to gain exposure to the yellow metal. Over the past two years, investors have increasingly preferred ETFs over gold, as evidenced by the increase in the number of portfolios, ”said Nitin Kabadi, Head of ETF Activities, ICICI Prudential AMC.
Should You Buy Gold ETFs This Diwali
He added that by investing in gold ETFs, there is no need to worry about the risk factors associated with physical gold like theft, purity, illiquidity and storage costs. , because the units are held in a current account.
“You can buy gold ETFs by investing an amount as low as ??50 and the transaction, whether buying or selling, can be executed at any time during trading hours on the stock exchanges, ”said Nitin Kabadi.
Benefits of investing in gold ETFs
Another advantage is that gold ETFs are highly regulated, thus ensuring that the interests of investors are protected at all times. Other than that, gold ETFs tend to be tax-efficient as they are subject to long-term capital gains tax with indexation benefits.
Gold ETFs are the most liquid ways to invest in gold internationally
“Exchange traded funds are one of the most liquid ways to invest in gold internationally. However, in India there are 11 listed gold ETFs, and investments in this asset mode are for those who want easy cash at their fingertips, ”said Mr. Prathamesh Mallya, AVP-Research, Non-Agri Commodities and Currencies, Angel One Ltd. .
However, if one wants to invest in Gold ETFs, they must have a Demat account. “Gold ETF offers similar value to SGB as it is also tied to gold prices but it has no exit restrictions. The ETF requires a Demat account so it can be used only by people who understand the how the investment works, ”said Nitin Misra, co-founder, Indiagold
A recent report by Acuity Ratings & Research Ltd showed that India’s gold imports hit a decade-high level in the first half of FY22, as a slight correction in domestic prices of gold of 2.7% from the peak seen in May also boosted domestic demand for gold. “It is also likely that some of the increased household savings in the higher income categories will be partly deployed in physical gold, as it has traditionally been viewed as a safe haven in an environment where pandemic risks are encountered. continue to exist, ”said Suman Chowdhury, chief analytical officer, Acuity.
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