Gold ETF?

#1
Hi,

Appreciate your comments.

I want to know how Gold ETF work?

I did a comparison of all Gold ETF's

All Gold ETF's are showing around 26% annualized return for the last three years.
 

Alchemist

Administrator
Staff member
#3
Check the gold ETF brochure at NSE's site:

http://nseindia.com/content/products/prod_etfs7.htm

Please see the chart in page 2.

What is the unit/contract?

Does that mean I can convert my ETF to physical form?
Unit/contract is the amount of gold that each contract of the ETF represents.

All but one gold ETFs in India have a contract size equal to 1 gram of gold.

Only exception is Quantum Gold Fund, for which each ETF unit (ETF contract) represents half gram of gold.

------------------------

As a retail investor, you can't convert your ETF holdings to physical form.

You have to sell them in the open market.
 
#7
Expert Opinion

I need basic information

I Have ICICI Direct Demat account , now for delivery of shares ICICI takes approx 1 % total transaction fees, Now for GOLD ETF How much they take fees, if somebody buy 10 gm approx@ 20000 Rs unit than 1% will be 200 Rs than in ETF it will be large impact our effective buy price is 20200 & similarly while selling another 200 Rs so total 400 Rs with 0 profit.

I always think whether ETF will give good return as transaction fees will have more impact on profitability.

Even if we buy whether units will be seen in demat allocation or somewhere else?
 

Alchemist

Administrator
Staff member
#8
I need basic information

I Have ICICI Direct Demat account , now for delivery of shares ICICI takes approx 1 % total transaction fees, Now for GOLD ETF How much they take fees, if somebody buy 10 gm approx@ 20000 Rs unit than 1% will be 200 Rs than in ETF it will be large impact our effective buy price is 20200 & similarly while selling another 200 Rs so total 400 Rs with 0 profit.

I always think whether ETF will give good return as transaction fees will have more impact on profitability.

Even if we buy whether units will be seen in demat allocation or somewhere else?
I have never done a transaction in a Gold ETF, but as far as I know, ICICIDirect has the same brokerage rate for all instruments (equity, debt, ETF etc).

Again I am not sure, but all ETF units should be visible in "Demat Allocation".

Both debt and equity instruments bought from the stock exchanges are shown together in "Demat Allocation".
 

Atiker

Active member
#9
I have never done a transaction in a Gold ETF, but as far as I know, ICICIDirect has the same brokerage rate for all instruments (equity, debt, ETF etc).
For me it charged 0.6%.

Again I am not sure, but all ETF units should be visible in "Demat Allocation".
I confirm it does show.

niki_baroda said:
I always think whether ETF will give good return as transaction fees will have more impact on profitability.
For "investing" in GOLD, buying ETF is more cost effective than buying physical gold.

Transaction charges from the "expensive" icicidirect is 0.6% compared to handling charges of 5-10% charged by the friendly jeweler and 10-30% charged by the banks.

Also redemption is convenient via exchanges. Banks don't buy back.

And if you sell to the friendly Jeweler for cash (i.e you don't buy any jewelery in exchange and also he knows that you won't buy any in future) then he will give you the shocking but real price for the gold-stuff in your hand.

Only point in favor of physical gold is to park black money.
 
#10
Thanks

Can some expert tell me which ETF is better, As I never buy so far, From ICICI Direct what will be the code of this ETF ?? I mean for POWERGRID Code is POWGRI similarly what will be the code for best ETF provider company?
 
#11
an some expert tell me which ETF is better, As I never buy so far, From ICICI Direct what will be the code of this ETF ?? I mean for POWERGRID Code is POWGRI similarly what will be the code for best ETF provider company?
I buy either Benchmark Gold BeES or UTI gold, Gold BeES is more popular and more liquid.

ICICIDirect codes are

Gold BeES : GOLDEX.
UTI Gold : UTGOLD.
 

San Yad

Active member
#13
One doubt:

In international market, we saw 2.5 % sell off on Friday trade.

Why Gold BeES are not down in the same trend?

I was expecting about 2% fall today. :( .
 
#14
One doubt:

In international market, we saw 2.5 % sell off on Friday trade.

Why goldbees are not down ain the same trend?

I was expecting about 2% fall today:(
Price in INR is approximately equal to Price in USD x USD-INR exchange rate.

In the scenario you mentioned, maybe the change in USD-INR exchange rate compensated the change in USD gold prices.
 

Alchemist

Administrator
Staff member
#15
One doubt:

In international market, we saw 2.5 % sell off on Friday trade.

Why Gold BeES are not down in the same trend?

I was expecting about 2% fall today. :( .
Compared to the underlying securities/commodities, ETFs are not very liquid.

Thus, ETFs are less sensitive to the movement of the underlying securities/commodities.

Even if you look at movements of index ETFs, you will find similar discrepancies.

Stock futures follow stock prices so accurately as stock futures are very liquid too.
 
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