What is a Gold ETF, and how do you invest in it?
1min 9 seconds read
A gold ETF is an exchange-traded fund with the objective of tracking the domestic physical gold price. It is a passive investment instrument that invests in gold bullion according to current gold prices. Therefore, in simple terms, Gold ETFs represent physical gold (in paper or dematerialized form).
1 Unit of Gold ETF = 1 Gram of Gold.
Gold ETFs are traded on the Indian stock exchanges - like any other stock of a company. Just like how an investor would trade stocks, you can also trade Gold ETFs.
Gold ETFs are primarily listed and traded on the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). They are traded in the cash segment and could possibly be bought and sold continuously at market prices.
The direct route to buy gold ETFs will require you to open a demat account through a stockbroker. After this, similar to purchasing shares, you can buy units of gold ETFs directly.
The process is explained here in detail:
- Consult a stockbroker and open an online trading and demat account.
- On your trading portal, log into the account with the required credentials.
- Now, choose the gold ETFs you wish to purchase.
- Once you have purchased your desired amount of gold ETFs, you will get a confirmation message.
- In case an investor does not wish to invest in gold ETFs through the demat manner, they could also invest in gold mutual funds that indirectly invest in these ETFs.
- This means the investor is investing in gold mutual funds, whose underlying assets are gold ETFs.
Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.