How to buy Gold ETF?

How to buy Gold ETF?

Listed below is a simple way to own a Gold ETF.

Gold EFT are fast becoming a rage in India. One reason attributed to its popularity could be its stellar performance in a relatively subdued market conditions.

When first introduced in India, many were skeptical about its relevance and suitability in Indian markets, however increasing volumes and new scheme launches(Quantum, SBI) indicate its growing acceptance in a naive market like India. It is a complex financial instrument. (read EFT F.A.Q).It involves many different entities apart from usual fund managers who manage the scheme. However, its has its own limitations since it is listed on exchanges.

Many people are unaware of ways to buy a GOLD ETF.

You need a Demat account along with broker who is a member of NSE to buy a Gold ETF.

 

Some of the popular brokerage firms like ICICI Direct, HDFC Securities, KOTAK Securities.

Along with traditional brokerage firms like India Infoline, Geojit, IndiaBulls, Sharekhan also offer a demat account with brokerage facilities.

 

Once you have a brokerage account you can buy Gold ETF by placing an order like a normal stock order to buy listed Gold ETF. Most of the ETF are listed only on NSE. Unfortunately, BSE does not have any Gold ETF listed on it.

Additionally codes like be required to be inputted to buy it online or through telephone, as many brokerage firm’s customer care executives are unaware of the codes.

[picapp src=”7/7/9/d/Gold_Price_Hits_de9a.jpg?adImageId=4655057&imageId=5779529″ width=”500″ height=”179″ /]

Benchmark Mutual Fund – Gold Benchmark Exchange Traded Scheme (NSE Symbol: GOLDBEES)

 

See today’s price Nav of Kotak Mutual Fund – Gold Exchange Traded Fund (NSE Symbol: KOTAKGOLD)(See price chart)

 

See today’s price Nav of UTI Mutual Fund – UTI Gold Exchange Traded Fund (NSE Symbol: GOLDSHARE)

 

See today’s price Nav of Reliance Mutual Fund – Gold Exchange Traded Fund (NSE Symbol: RELGOLD)(See price chart)

 

Quantum Gold Fund – Exchange Traded Fund (ETF) (NSE Symbol: QGOLDHALF)

Interesingly, Quantum Gold is also available for 0.5 grams(1/2 gram) of gold. Now that’s truly a product for the masses since the pricing is half of other available Gold ETF.

Apart from Gold ETF, some other mutual funds are also available which invest in different gold mining companies and international gold funds as well.

 

Funds like DSP ML World Gold and AIG Gold Fund have also fared better than indicative markets indices.

 

Since these funds(DSP World Gold, AIG Gold) are not ETF’s, no demat account is required and can be purchased like any other mutual fund schemes.

Update: January, 07, 2009.
Now Kotak Securites has launched a facility where investors can invest in Gold ETF on a regular basis.
These facility in similar to SIP in GOLD ETF, or GOLD ETF SIP.
Kindly comment in case any other brokerage has similar facility.

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18 thoughts on “How to buy Gold ETF?

  1. Required to understand the flow chart for tradind in ETF
    Also what amount of extra cost is involved as compared to the gold we purchase from the open market?
    How safe is the investment & liquidity of the ETF’s?

    Please guide me.

    Like

  2. @Bhavesh,

    Your question sounds more like a corporate presentation for Gold ETF. Anyways..

    Flow chart of buying Gold ETF would be similar not the same to buying any stocks from your broker.

    The costs involved for the investor would be similar to be same costs involved in buying a stock.

    The safety is assured as units are created and gold is deposited in escrow accounts for the fund house.

    For Liqiudity there are market makers which trade in these units and these units are bought and sold on exchanges much in the same way as are stocks. I shall post later on about liqidity and creation of escow in Gold ETF. Stay connected..

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  3. Here are the ICICI Direct codes for the ETFs:
    KOTGOL KOTAK GOLD
    RELGOL RELIANCE GOLD
    GOLDEX BENCHMARK GOLD
    UTGOLD UTI GOLD
    QUGOLD QUANTUM GOLD

    Like

    • @William,
      Kindly note this site is for EFT in India.
      We have little knowledge in US markets.
      You cannot short in EFT unfortunately as far as i know. However, you can buy BlackRock World Gold Fund which invests in Gold Mining companies which might might have decreased valuation, if you think Gold prices might fall.

      OMF.

      Like

  4. When you invest into these Gold ETF and in turn the fund houses buy gold, what is the carat value of the gold that these fund houses buy?

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  5. One bad thing about buying gold etf’s is that the brokerage house treats this etf as any other stock. Due to this the brokerage on buying/selling of an etf is pretty high for the price movements we see in gold. So is there any other option which is a cheaper way to buy gold etf?

    Like

    • @Raghav,

      Unfortuantly, ETF are supposed to be cheapest source of investing. However, in unique markets like India, things work differently here. The cheapest route of investing elsewhere is not really cheap here in India.

      It is sad but true.

      OMF.

      Like

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