Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE) like a single stock of any company. Buying gold ETFs means you are purchasing gold in an electronic form. You can buy and sell gold ETFs just as you would trade in stocks. When you actually redeem gold ETF you don’t get physical gold but the cash equivalent.
Trading of gold ETFs takes place through a dematerialised account (Demat) and a broker, which makes it an extremely convenient way of electronically investing in gold.
How does it work?
Is it for me?
If you are someone who doesn’t want to invest in physical gold due to the storage hassles and are also looking to get tax benefits then this is for you. Moreover, it is very easy to buy and sell your ETFs at the click of a button.
Still wondering why gold ETFs make such a great investment tool?
How do I redeem it?
Gold ETFs can be sold at the stock exchange through the broker using a Demat account and trading account. Even though you are investing in an ETF that is backed by physical gold, remember that ETFs are best used as a tool to benefit from the price of gold rather than to get access to physical gold. So, when you liquidate it, you are paid in rupees that are equivalent to the domestic market price of the gold that you were holding via ETFs. Asset Management Companies may permit you to redeem your ETF in the form of physical gold if you hold the equivalent of 1kg of gold in ETFs, or in multiples thereof.
Refers to the ability of gold to generate liquid cash much quicker than any other investment avenue. Gold is one of the most highly liquid investments that one can make, especially in India.
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