Gold prices are on a rebound this year in 2016, after being lacklustre through the last few years. In fact, gold and investments like Gold ETFs have gained as much as 22 per cent, since the start of the year, making them the best asset class and beating shares, real estate and bank deposits.
First, before telling readers how and where to buy gold ETFs, let us answer:
Why you should buy Gold ETFs?
One of the most important reasons to be buying Gold ETFs is that they track gold. Now, if you are buying gold coins as investments, why not try Gold ETFs, because you do not have to bother about storage, nor have you to bother about, theft.
So, there is a clear advantage as far as Gold ETFs are concerned.
How and where to buy these Gold ETFs?
Gold ETFs are traded on the exchanges, so, you can buy them just like you buy shares. There are two ways you can buy these Gold ETFs. The first is that you place an order with your broker who would pick them up for you. The other way to buy these is to place an order through the online mechanism, which you use to buy and sell shares.
For example, you can now buy the shares of UTI Gold Exchange Traded Fund at Rs 2686.50, which is also the gold price. As we mentioned earlier Gold ETFs tend to track gold prices. So, if gold prices move up or down, gold ETFs would move in the same direction.
Since international prices of gold have gone up in the last few months, the price of these instruments too have gained ground.
There are a number of Gold ETFs that are currently traded on the NSE. Some of these include Axis Gold ETF, Birla Sun Life Gold ETF, Canara Rabeco Gold ETF, Goldman Sachs Gold Exchange Traded Scheme, ICICI Prudential Gold Exchange Traded Fund.
All of these as mentioned earlier track gold prices.
Should you buy these Gold ETFs?
If you are looking to diversify your assets, it is a good idea to buy Gold ETFs. Let us give you an example. Let us say that you have invested in equities.
Now as you all know it is a risky proposition to put all money in equities. Now, in times of geo-political or economic tensions, equity shares would fall and gold would rally. Now, if you have diversified your portfolio, you have created a hedge. For example, now what would happen is that whatever losses you incur in shares, could be made-up by gains in Gold ETFs.
Hence, it is advisable to diversify your portfolio and hold some amount of Gold ETFs as well. Most of the ones mentioned above, give you similar returns. However, select ones like UTI Gold ETF and IDBI Gold ETF have done exceptionally well in the last few years.
This makes them good picks from a long term perspective.