Gold ETF and E-Gold are the current trend in gold investment. It is advisable to spend money in Gold ETF or E-Gold if you are willing to earn money through investment methods. From ancient times onwards gold is considered as the primary asset for humans. There will not be a primary reason for one to buy gold. Some will buy it as ornaments others will consider it as a materialized form to show their wealth. Anyway the interest for man in gold will never perish. Here the main trends in the gold investment Gold ETF and E-Gold along with its essentialities are discussed.
Physical gold could be purchased from any of the bank or even from the jewellery shop. A gold investor would not prefer these options. Investors cannot sell it back to bank. In regards to jewellery investor is always considered about running the quality risk. So he prefers Gold ETF or E-Gold.
Main option in gold investment is provided by Gold ETF. An ETF is an Exchange Traded Fund; it is traded on major stock exchanges. Gold ETF will purchase a large amount of gold, maintaining the physical metal in storage. The will issue shares in parts. The idea behind is that the value of the shares will increase with the price of gold. If the price of gold rises up by 10%, the individual shares would increase in the same by 10%. Gold ETF is an instrument traded on stock exchange. The instrument is managed by fund manager. Typically 90% of total fund is towards investment in physical gold and rest in the instrument as decided by the fund manager which is fixed in future. Fund house will claims that Gold ETF also allows delivery of the physical gold against the surrender of Gold ETF units. One unit of Gold ETF is approximately equivalent to 1 gm. Here one should note that NAV is not a true reflection of Gold price. If one would like to take the delivery in physical form he has to make cash payment separately.
Best Gold ETFs in India
Gold Benchmark ETF
Axix Gold ETF
HDFC Gold ETF
ICICI Prudential Gold ETF
Kotak Gold ETF
Quantum Gold ETF
Reliance Gold ETF
Religare Gold ETF
SBI Gold ETF
UTI Gold ETF
Recent price hikes in gold provide opportunities for customers to deposit funds in gold. All National agencies have launched a unique investment product in gold on its platform. Small investors will get chance to invest in gold in smaller denominations. E-Gold gives opportunity for Investors to invest in gold (minimum 1 gram). NSEL (India) came with the objective to develop a convenient and cost effective platform to buy and selling physical gold by providing an option of holding gold electronically (using Demat account). This is helpful; it will reduce the cost in holding the physical gold. People can trade and invest in gold just like shares. E Gold is traded on National Spot Exchange and available in exactly multiples of 1 gm without any charges towards storage or any other accounts. This product is designed specifically looking at the investor’s requirement.
How gold price will increase in coming years?
There are three reasons which can be described to show that gold price will increase in upcoming years.
After recession global finance is not yet recovered to its stable state. In this situation people all over the world find gold as a secure investment material. Due to this gold price will increase in the future.
Petrol price hike and the decrease in the value of dollar will also help in the increase of gold price.
Gold mining requires huge investments. New gold mines are not discovered, so more investment is needed to extract gold from currently used mines. Thus the production cost of gold increases which will directly increment the gold price.
Is it advisable to invest money in Gold ETF or E Gold while the price is increasing?
There is nothing wrong in spending money to buy gold or investing in Gold ETF. But consider how much money to be used for purchasing gold or for investing in ETF. If one is well known about Mutual Funds and Shares, it is advisable for such person to invest money not only in gold but also in Shares and Mutual Funds. Financial planners are saying only to use 10% of fund kept for investment. It can be raised up to 20% if one person is interested more in gold. Rather than fully depending on Gold ETF or E Gold it is profitable to invest money in Shares and Mutual Funds.
Adam J LaCombe on May 20, 2018:
InGoldWeTrust from Colorado on July 25, 2012:
The Problem with ETFs is that you don't know that they actually have the gold they say they have. Central Banks, ETFs and Bullion Banks all engage in gold leasing. They lend it to someone else but still have to keep it on their books. It is not clear once it is lent who then owns the physical at that moment. If you ring up the ETFs they will say they own the gold but do they really
Caerleon on January 03, 2012:
Investors looking to use gold as a means of securing a greater level of financial stability, and shielding their "nest egg" against inflation should potentially consider looking to physical gold, rather than ETFs, as there is greater security.
ETFs are better for those looking to actively trade and profit from their gold.
forexpulse from Califorrina on November 07, 2011:
gold investment is a secure investment material