Why you should invest in gold ETFs

India Infoline News Service | Mumbai | June 18, 2017 10:40 IST

Gold Exchange Traded Funds (ETFs) is a financial product which is listed on a stock exchange like shares and investors can easily buy or sell them as and when they wish.

Gold ingots
Gold Exchange Traded Funds (ETFs) is a financial product which is listed on a stock exchange like shares and investors can easily buy or sell them as and when they wish. So gold ETFs provide ownership of the underlying asset—which is gold—and offers investors a secure and cost-efficient way to get returns that are equivalent to the movement in spot prices of gold (minus management fees),
The advantages of investing in gold ETFs are many, as compared to investing in physical gold. Since a gold ETF can be bought or sold anytime like share on a stock exchange, it is a highly liquid asset. Since the transactions in gold ETFs happen online through demat account, buying and selling gold ETFs is a highly convenient, transparent and quickest way to take exposure in gold. One can track the value of investment in gold ETF is real time and take instant decision to buy or sell and take advantage of a favourable price movement.
In contrast, the liquidity of physical gold is rather constrained as one has to find a suitable buyer, usually a jeweller, who is willing to pay the market price for the physical gold (net of making charges minus sundry deductions such as wastage, etc). Plus, the risk of theft or loss while taking physical gold to the jeweller can be worrisome.
The cost of buying and selling gold ETF is far less compared to the costs involved in buying and selling of gold. This is because the transactions in gold ETFs happen online, so there are no costs involved in storing and insuring physical gold. Moreover, when you buy jewellery, you may need to pay making charges and even delivery charges, but in the case of gold ETFs, no such charges are required to be paid.
Then, when buying physical gold, there is the risk of impurities and adulteration which compromises the quality of gold. There are no such risks when it comes to gold ETF as the purity of gold is consistent. Also, since gold ETFs are in electronic form, there are absolutely no risks involved, whereas the risks involved in storing physical gold need not be emphasized.
Last, but not the least, investing in gold ETF provides the necessary diversification to your portfolio of investments. Needless to say, such diversification in various asset classes is essential to mitigate the risk of your investments.
Now, that you know the many advantages of investing in gold ETFs, what are you waiting for? Just go ahead and invest!

Disclaimer: The contents herein is specifically prepared by ‘Dalal Street Investment Journal’, and is for your information & personal consumption only. India Infoline Limited or Dalal Street Investment Journal do not guarantee the accuracy, correctness, completeness or reliability of information contained herein and shall not be held responsible.



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