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Summary: Gold and silver ETFs may soon see a shift in how they're valued, if SEBI’s latest proposal goes through. The regulator is aiming to fix a crucial inconsistency in the way fund houses price these assets. Find the details below.
The Securities and Exchange Board of India (SEBI) has proposed that mutual fund houses shift from using global benchmarks to domestic spot prices for valuing the physical gold and silver held by their gold and silver ETFs.
In a consultation paper released on July 16, 2025, the regulator said the move is aimed at standardising valuation practices across the mutual fund industry and removing discrepancies that arise from the current methodology.
Why SEBI wants a change
Currently, gold and silver ETFs value their physical holdings based on the London Bullion Market Association (LBMA) prices, which are converted from troy ounces to metric units and from US dollars to Indian rupees using RBI’s reference rate. Duties and taxes such as customs and GST are then added.
While the valuation process begins with LBMA pricing, it is ultimately adjusted to align with domestic spot prices. But fund houses use different methods for this adjustment, resulting in varying performance of ETFs across the industry.
In contrast, exchange-traded commodity derivatives (ETCDs) on gold and silver already use closing prices from Indian exchanges for valuation.
SEBI said the proposed change would help simplify the valuation process, enhance transparency, and bring consistency across mutual fund schemes investing in these precious metals.
Public comments on the proposal have been invited until August 6.
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