Know about Gold Exchange-traded funds (ETFs)

Why should you invest in Gold?

Gold has become an essential part of a sensible investment portfolio, being seen as a safe haven while stock markets fluctuate.

Historically, gold prices have shown better stability even during periods of crisis, as compared to other investment types. Most experts advise investing in gold as a "must", since gold creates a robust portfolio that withstands market fluctuations. Gold has reflected providing stable returns in the long run.

With Gold Exchange-traded funds (ETFs), investors hold units of gold with a fund who has invested in physical gold.

• Gold is a natural hedge against inflation and currency volatility.
• Low Volatility as compared to Equities.
• Gold price appreciation makes up for lost interest, especially in a bull market.
• Listed and traded on NSE and BSE just like a stock -Easy Buying/Selling.
• Quick & convenient dealing through Demat account.
• No Storage & Security Issues for investors.

What is Gold ETF?

Gold ETF is a security listed on the stock exchange available for trading with an intention to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold.

Gold ETF is correspond to the returns provided by designed to provide returns that, before expenses, closely domestic price of Gold. Each unit is approximately equal to the price of 1 gram of Gold.

In simple words investing in Gold ETFs is investing in Gold through dematerialized form.

Comparison of GOLD ETF's vs GOLD BARS vs JEWELLERY

Transaction Charges	Jewellery	Gold Bars	Gold ETF's
Purchase	Making charges of 15-20 %	10-20 % mark up charges by banks	Brokerage of 0.5% or even less
Sell	10-20 % is lost due to purity issues	Banks do not take it back, so premium paid at time of purchase is written off	Brokerage of 0.5% or even less
Maintenance	Insurance charges and locker charges (if you put in locker)	Insurance charges and locker charges (if you put in locker)	1.00%
Tax Implications	Long term capital gain, but after 3 years, plus wealth tax	Long term capital gain, but after 3 years, plus wealth tax	Long term capital tax of, but after 1 year. No wealth tax

How to trade in GOLD ETF?

Steps to Trade Online :

Step 1 - Log on to your Trading account
Step 2 - Click on Buy/Sell
Step 3 - Enter Script code (e.g HDFC Gold) & No.of units
Step 4 - Place your order

List of Gold ETF available

AXIS MF - AXIS GOLD ETF
BENCHMARK GOLDBEES
UTI GOLD ETF
HDFC GOLD ETF
QUANTUM GOLD FUND
RELIANCE GOLD ETF
RELIGARE GOLD ETF
SBI MF-SBI GOLD ETS-GO
ICICI PRUDENTIAL GOLD ETF
KOTAK GOLD ETF

Reference: http://www.hdfcsec.com/