Updated on March 19, 2023
Gold ETF is a form of exchange-traded fund (ETF) which tracks the domestic physical gold price. It is a passive investment based on gold prices representing physical gold. A Gold ETF unit is equal to 1 gram of gold and is backed by high purity physical gold. Gold ETF is a simple investment which can be considered as a combination of equity and gold providing the flexibility and tradebability of stock market investments and the ease of gold investments.
Features of Gold ETFs
Features of Gold ETFs are:
a) A demat account is required for investing in Gold ETFs, like for other ETFs and these can be traded easily on exchanges.
b) Gold ETF prices are transparent and the same across the country.
c) Gold ETF is backed by 99.5% pure gold and is secure as it is in paper or demat form.
Benefits of Gold ETFs
Benefits of Gold ETFs are:
1. Gold ETFs act as a hedge against inflation and also provide an opportunity for diversification.
2. It is a low cost gold investment as there are no making or storage charges involved.
3. There are no storage costs involved for the investor, unlike physical gold.