Gold ETF | Gold ETF – India

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Gold ETF – India

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When looking to international markets for a gold ETF, India would often be first on your list.  Why is that?  Simply, India has probably the largest fascination with gold than any other country in the world and is by far the world’s largest buyer of gold, accounting for 9.5 percent of the world’s total gold holdings.  More impressive is the fact that current demand from India alone consumes 25% of the world’s annual gold output.

Gold is viewed in India as a symbol of power and wealth.  However more so nowadays, the people of India buy gold as a hedge of protection from their own rupee currency and government mismanagement.  Gold is highly valued so much so that it’s not uncommon for an Indian to use their gold jewelry as collateral for a loan.

It’s no wonder then why India is often associated with gold and why investors would expect a gold ETF in India to be an investment worth considering.  Fortunately India doesn’t disappoint as there are currently 6 gold ETFs India has to offer, all of which are traded on the National Stock exchange (NSE).

Now before I get into the specifics of these ETFs, I should mention that if you are a US investor and wish to buy a gold ETF for gold exposure, there’s really no compelling reason to own an Indian gold ETF over an American one unless of course you believe the Indian rupee will continue to devaluate at its current pace which has made Indian gold ETFs quite attractive over the past few years.  Long term however, I would personally stick with the most popular ETF gold fund; the SPDR Gold Trust (NYSE:GLD).  The GLD has a very large trading volume making it liquid enough for most investors coupled with a low expense ratio (0.6%).  Indian gold ETFs on the other hand have typically higher expense ratios ranging from 1% up to 2.5%!  Not to say Indian ETF funds are a bad choice; they just wouldn’t necessarily by the first choice for someone living in the US.  If you happen to live in India however, they are definitely worth considering as an alternative to owning physical gold.

Here are the 6 gold ETFs available in India:

  1. SBI Gold ETF (SBIGETS.NS) – The State Bank of India’s gold ETF is the newest addition to India’s market.
  2. Gold Benchmark ETF (GOLDBEES.NS) – The most popular and considered by many as the best gold ETF in India.
  4. Kotak Gold ETF (KOTAKGOLD.NS)
  5. Reliance Gold ETF (RELGOLD.NS)
  6. Quantum Gold ETF (QGOLDHALF.NS)
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2 Responses to “Gold ETF – India”

  1. Arun Singla on May 2nd, 2010 4:00 am

    Are the Indian Gold ETF’s fully backed by physical gold? How about the silver ETF’s? Since these are ETF’s what is the reason for expense ratio’s of upto 2.5%?

  2. Anonymous on May 3rd, 2010 9:26 pm

    Most gold ETF’s including those in India claim to be backed by physical gold but what really matters in the end is for what purpose are you buying a gold ETF? If it’s to profit from the price of gold in the short to medium term then great but if you’re buying one as a security against government mismanagement and fiat currencies then there really is no substitute for owning physical gold. The same goes for a silver ETF or any other precious metal ETF.

    As for the reason for the typically higher management expense ratios on Indian Gold ETFs, there isn’t really a good answer for this except for lack of competitiveness in the current Indian gold ETF market which is why, given a choice, most investors will go for a GLD over an Indian alternative.