Query - How Gold ETF works?

Dear exprts,

I want to know,

1. How our money is invested in the Gold ETF & how mney grows in Gold ETF.

2. Insted of buying Gold ETF is it worth to buy Gold Bars phisically.

please suggest,

thanks in advance,

Girish.

5 Answers

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  • HMT
    Lv 7
    1 decade ago
    Favourite answer

    Mention your nationality or you get irrelevant answers from foreigners.

    I purchased Reliance Gold ETFs on 17/09/2008 at Rs 1148/- per unit.

    Today after more than 13 months the unit price is Rs 1589/- i.e. a gain of 39%

    The unit price is equivalent to 1gm of gold.

    Do not buy physical gold. You loose on taxes.

    HMT

  • Ted
    Lv 7
    1 decade ago

    A gold ETF doesn't engage in any business activity, so your money won't "grow" like investing is a growing company. The ETF simply pools the money and buys bulk gold and sells it to redeem shares. If the price of gold goes up, you profit, otherwise, you lose.

    Buying physical gold is a bad idea. There are the same risks as with an ETF, plus the fact that you are adding fees and big commissions for the dealer to buy and to sell.

  • 1 decade ago

    A gold ETF is designed to track the gold price. How it does this depends on the particular ETF.

    GBS tracks the price by buying physical gold.Others may use an Index to do it. You would have to check each individual ETF.

    An alternative to etf or gold bars is coins. In particular Krugerrands or maybe UK Sovereigns

  • ?
    Lv 4
    4 years ago

    They use futures contracts. A futures settlement has a similar return as gold bullion (extra or much less) and is obtainable with a minimum of 8-a million leverage. thus, the ETF takes your money and places a number of it into T-charges or different cahs investment and then makes use of the rest as margins on futures contracts that provide you a 2x investment in gold. this is a somewhat user-friendly plan and use ought to apply something so user-friendly as a spreadsheet to rebalance familiar and save the fund returning 2x gold.

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  • Yorky
    Lv 6
    1 decade ago

    A gold ETF (Electronic Traded Fund) is a closed-end mutual funds that hold gold, or gold related stocks primarily.

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