InvestorQ : How exactly do I hold gold in the form of gold ETFs? Is it a safe and secure method?
Priyanka N made post

How exactly do I hold gold in the form of gold ETFs? Is it a safe and secure method?

Answer
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NISHA Nayak answered.
1 year ago


From an investor’s perspective, there are a variety of ways to hold in non-physical form. In all methods of holding gold in non-physical form, there is participation in the movement of gold prices. At the same time, since gold is held in non-physical form there is no threat of the gold being stolen or even loss of gold in processing. Let us focus on the merits and challenges of holding gold in the form of an exchange traded fund (ETF). Gold ETFs are quite popular in India.

What do we understand by a Gold ETF? An exchange traded fund is listed and traded on the stock exchanges like any normal stock. You can buy and sell these gold ETFs through your normal trading account and hold these ETFs in your regular demat account along with all your other equity and debt investments. An ETF is normally like a mutual fund with the only difference being that it is closed ended and each purchase has to be backed by a sale. There is no fresh issue of gold like in case of mutual funds. Gold ETFs are perfectly safe because they are backed by actual physical gold which is kept with a gold custodian bank. One of the largest gold custodian banks is the Canadian Bank of Nova Scotia. Since a buyer and seller are required for exiting ETFs, it leads to reduced price volatility.