What
is a Gold ETF?
A Gold ETF is
an exchange traded fund, having the underlying asset as Gold. Thus the Gold ETF
represents physical gold which may be in paper or in the dematerialised form.
The advantage here is that the buyer of a Gold ETF doesn’t have to deal with
the delivery of physical gold, but still can buy and sell it in the Stock
market.
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| Smart Way To Invest In Gold |
Not all the Gold ETFs have purely gold as their sole
asset. In most of the cases, apart from having gold as a major asset, these
funds might also have some Debt instruments and Cash as an asset. The
proportion and the holding of these assets varies from every fund to the other.
What
is the advantage of Gold ETF?
There are many advantages of investing in a Gold ETF
rather than investing in Physical Gold. ETFs provide a completely transparent
and convenient way of trading in gold for the investors. They provide a hassle
free way of trading the yellow metal without incurring the costs associated in
other forms of gold trade.
What
does the price of 1 unit signify?
Theoretically, each unit of the Gold ETF represents 1
gram of gold. As the price of Gold increases or decreases, the unit price of
the Gold ETF also fluctuates accordingly.
However the fund might also have other types of assets
other than gold, as described in the previous section. Thus the prices of the
Gold ETF units will vary from fund to fund.
Another major contributor to the variation of the unit
prices, is the Expense Ratio for the fund. The operating expenses for every
fund will vary widely. This factor will also affect the unit price of a Gold
ETF.
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How
to buy and sell Gold ETF?
Once purchased, the units of Gold ETFs will also be stored in the dematerialized form in your Demat account. You can sell it from this account