6 reasons to buy Gold ETFs in place of physical gold

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Gold ETFs are like shares where you hold gold in the electronic form, but, you get the prices of gold, since Gold ETFs track physical gold prices. Here are 5 reasons to buy Gold ETFs, unless it's for ceremonial purposes.

No fear of theft

Gold ETFs are held in the electronic form, which completely eliminates the chances of theft. At the same time when you sell, you get the price of gold.It thus gives you the benefit of safety and price.

Easy to encash

If you try to sell gold, there are several disadvantages as the jeweller might ask for receipt and will give you a price way below the prevailing market price. A better price mechanism prevails as far as Gold ETFs are concerned and they are more liquid.

No storage costs involved

There is no need to incur storage costs like locker rentals in the case of ETFs, while you may need to incur the cost in the case of physical gold.

No tensions over purity

There is no question of purity when it comes to Gold ETFs, since they track gold prices only and you are not getting physical gold. In the case of the latter, you need to worry about the purity.

Helps conserve forex

India imports gold and if you invest in physical gold, a lot of foreign exchange outflow happens, which puts pressure on the current account deficit and the Indian rupee. By investing in ETFs, there is no such problem.



Transparency in pricing

You will get a uniform rate across for ETFs, when you trade and there will not be a huge price differential at any given point of time. In the case of physical gold you would have to keep checking with several jewellers until you get the right price. 

Read more about: gold etfs, gold
Story first published: Wednesday, August 13, 2014, 8:41 [IST]
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