What are Gold ETFs and benefits of investing in Gold ETFs

A mutual fund investing in gold is a gold ETF or exchange-traded fund. By holding an ETF, you can get as much return as you can through buying gold without the hassle of physical purchases. On the stock exchange, you can buy and sell units of gold ETFs. Therefore, to buy and sell gold ETFs, you need a Demat and a trading account.

A gold ETF is an investment based on a gold price instrument or invests in gold bullion. It trades on major stock exchanges and the Gold ETF monitors the gold bullion price. When the price of gold rises, the value of the exchange-traded fund also increases, and when the price of gold falls, the ETF loses its value. 

You can buy online Gold ETFs

Gold ETFs can be purchased online by investors and kept in their Demat account. An investor can buy and sell gold ETFs on the stock exchange. Gold ETFs are units rather than physical gold, which can be in the form of paper or dematerialized. A gold ETF unit is equivalent to one gram of gold and is backed by very high purity physical gold.

Now when gold exchange-traded funds (GETFs) are being sold in the market. Those GETFs will buy gold for you, with your money, and convert it into the paper. This paper, which can be in a physical, or dematerialized form, is called a unit.

A unit of a mutual fund is exactly like the stock of a company; It can be bought and sold on the stock exchange. 

Gold ETFs provide transparency

Gold ETFs allow investors to participate in the Gold Marker easily and also provide transparency, cost-effectiveness and safety risk to the gold market. They also offer liquidity value as it can be exchanged at any time during the trading cycle.

It is always good to explore the modern investment mode! Traditionally, gold was purchased as jewelry/ornaments or gold bullion. But, nowadays, many investors use the current method of buying gold, that is, gold ETFs. 

There are some benefits of investing in Gold ETFs: 

  • The security issue is eliminated as the units are held in a Demat account.
  • The purest gold backs gold ETFs.
  • It is the hit of inflation.
  • There is no premium or charger attached to the Gold ETF.
  • Gold ETFs are an excellent way to diversify the portfolio.
  • By nature, gold ETFs are liquid. Every time during a trading session, an investor can buy and sell gold ETFs.
  • Hedge against inflation
  • Inexpensive
  • Easy transactions
  • Secure investment

Conclusion: Gold ETF is an exchange-traded fund that invests primarily in gold. An ETF gold unit is equivalent to a gram of gold. These ETFs are listed and traded like a company’s stock on the NSE and BSE. Investing in gold ETFs is better than physical gold in many ways.

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