How and where to buy a Gold ETF in India?

Business

oi-Sunil

By Sunil Fernandes

Published: Friday, December 19, 2014, 11:21 [IST]

Many investors have gradually begun to understand the advantage of buying a gold ETF vis-a-vis buying physical gold.

Gold ETFs have many advantages as compared to Gold coins and bars. You do not face the threat of them being stolen or need to pay storage charges in the form of locker rentals. Therefore, it's always advantageous to buy a gold ETF in place of gold.

What a Gold ETF does is that it allows an individual to buy gold in the electronic form and hence does away with the need to buy physical gold. Interestingly, Gold ETFs track gold prices and hence you get exact gold prices when you buy or sell.

How to buy Gold ETFs?

Gold ETFs can be bought in the same way as you buy shares from the stock exchange. And to buy shares from the stock exchange, you first need to open a trading and demat account through a registered broker on the exchanges.

Once you open these accounts you can place the order online or could seek assistance from the broker to buy your Gold ETF. Most of the Gold ETFs track gold prices and hence most of them give similar returns. Therefore there is no good or bad gold ETF.

Should you buy a Gold ETF now?

Whether you should buy a gold ETF now or not depends on how you view gold prices in the near future. Gold gave negative returns in 2013 and is almost flat in 2014. In the last two years the metal has gone nowhere, as compared to the Sensex which has rallied a huge 30 per cent in 2014 alone. Many analysts say that with gold prices having fallen there could be some opportunity to buy the metal from a 2-3 year perspective.

Since equities have rallied sharply there is scope for some rally in gold in the next few years, as shares have become expensive now.

Also read 5 Gold ETFs that you could buy here

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