Gold ETF

ETF stands for Exchange Traded Funds, which is a type of security based on a collection of commodities or stocks. ETF has an underlying index, similar to that of mutual funds, and can be traded freely in exchanges.

Key Points

  • When the ETF is based on Gold as underlying security, then it is called Gold ETF. The ETF is available in both physical forms or in Demat form.
  • Each unit of ETF represents 1gm of 99.5% gold.
  • They are traded on stock exchanges and every Gold ETF performs like an individual stock.
  • An investor invests in units of Gold ETF instead of investing in the actual metal. Once purchased, he/she would obtain a certificate of investment. Upon trading, the unit’s equivalent cash is credited to the seller / original investor.
  • Gold ETF is seen as the best alternative form of investment and is used to hedge market risks.

Advantages of Gold ETF

  • Gold ETF can be used as collateral for loans.
  • They are safe and secure as the units of gold held through Gold ETF are in Demat form.
  • Gold ETFs are listed and traded on stock exchanges (BSE, NSE).
  • Gold ETF is a tax-efficient way of holding gold.

Gold ETF sees pullout of Rs 141 crore in November

Gold ETF saw a pullout of Rs 141 crore in November 2020 due to profit-booking by investors.  The category has witnessed inflows since April 2020. If we see the month-wise inflows, in January investors put Rs 202 crore, in February they put Rs 1,483 crore and withdrew Rs 195 crore in March on profit-booking.

In April 2020, the inflows were resumed and investors put Rs 731 crore in April, Rs 815 crore in May, Rs 494 crore in June, Rs 921 crore in July, Rs 908 crore in August, Rs 597 crore in September, Rs 384 crore in October, and finally an outflow of Rs 141 crore in November.

Gold ETFs has performed better in the year 2020 and received an inflow of Rs 6200 between January to November.


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