Individuals who are desirous of investment in gold can do so in a number of ways.
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Individuals who are desirous of investment in gold can do so in a number of ways. One way of investment is
to actually buy gold bullion otherwise purchasing an ETF is another option which replicates and reflects
gold price or the third option is trading options and futures in commodity market.
For investors direct investment in any commodity such as gold is much more difficult than investment in
mutual funds, stocks and shares as shares and funds can be transferred easily as it is in a dematerialized
form and this type of investment is prevalent everywhere. Even in the past it was more difficult to invest in
commodities as they were difficult to transfer.
Investment in gold is now easy with the advent of newer methods of gold investment where you are free
from any problems as you do not have to make any transaction in gold in its physical form. Investment in
‘Exchange Traded Funds or ETF is an alternative option where you are not required to handle the gold
physically but can conveniently buy and invest in gold. ETF is technically a financial instrument that
facilitates the purchasing as well as selling of merchandise. Especially in connection to gold ETF the
authorities connected to the institutes that release these ETF maintain the appropriate gold amount in their
storage and then issue certificates according to their value. This is mainly done to make sure that there is no
hassle in trading of gold.
Trading in ETF is similar to trading in the stock exchange market. The same techniques of trading can be
applied in ETF trading like marginal buying, short selling as well as purchasing one ETF or more. It is
mostly seen in the market in India that the gold prices and stock exchange move in opposing directions
therefore buying gold ETF adds safety and diversity to an individual’s portfolio. Now a days it is seen that
the domestic and international market govern the price of gold. These ETF follow real time gold prices.
Gold exchange financial products such as ETF are mostly traded in Mumbai, London, Paris, Zurich and
NYSE stock exchange.
While turning back pages in the history of gold trade we can see that Canada’s Central Fund was the first
ever gold exchange business. This fund was closed-end and goes back as far as 1961. Gold ETF or gold
exchange fund was first theoretically conceived in India by ‘Benchmark Asset Management Company
Private Ltd’. The stock exchange in Australia first launched its gold ETF in the year 2003.