Please suggest a good gold ETF to invest in. I also want information about the god spot exchange.
-Kushal
All gold ETFs are similar to one another. The way the function, the way they deduct expenses, etc is the same for all gold ETFs and has no bearing on their performance. Hence, you can invest in any gold ETF. Gold ETFs are completely different from funds in the sense that you are basically buying gold in paper form. A gold ETF allows you to ride the price of gold, they are available in the denomination of 1 gram or 1/10th of a gram. The prices of a gold ETF goes up exactly in line with the gold prices, expect that on an annual basis, they charge an expense of 1.5 per cent. So if you hold a gold ETF for a year, assuming that gold prices go up by 20 per cent, the value of your ETF holdings will be up by 18.5 per cent. To buy a gold ETF, you need a demat account.
The gold spot market is a commodity exchange. It has nothing to do with mutual funds. To buy gold on a commodity exchange, you will need to open an account with a broker. But keep in mind that when you buy a contract on a commodity exchange, you don’t get physical delivery of that commodity. You just participate in the price fluctuations of that commodity.
This article was originally published on February 02, 2012.
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