Gold ETF
An exchange-traded fund holding physical gold, whose units track the domestic price of the metal.
How it is identified
Test: the fund holds physical gold of standard purity, and each unit represents a stated weight of it
Unit
qualitative
In depth
A gold ETF removes the storage, purity and making-charge problems of physical gold while tracking its price closely, at an expense ratio typically well below the cost of holding jewellery. It requires a demat account, and its price on the exchange can drift from its indicative value when liquidity is thin. Gold generates no income, so its entire return is price change, which is why it is held for diversification rather than for compounding. It differs from a sovereign gold bond, which pays interest and carries a maturity but is far less liquid.
Worked example
An ETF at ₹62 a unit where one unit represents 0.01 gram implies ₹6,200 a gram. Physical jewellery at the same gold price plus 12% making charges costs ₹6,944 and returns less on sale.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Gold ETF” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.