Planning to buy Gold this Dhanteras? Try Gold ETF instead

Gold holds a venerable position in Indian culture. Almost every significant festival, event or milestone in an Indian household is celebrated by purchasing some amount of gold. It has been estimated that Indian housewives hold about 11 per cent of the world’s gold, i.e. about 27,000 tons. To put this into perspective, the Reserve Bank of India holds over 800 tons of gold in its reserves. Even the gold reserves of the USA, the IMF, Switzerland, and Germany put together is not as big as the gold held by Indian households.

India mines less than 1 per cent of the total gold consumed by the country. The percentage of the gold consumed that comes after recycling is about 14-15 per cent. The remaining gold consumed by Indians has to be imported, which adds up significantly to the import bill of the country. This, in turn, is not that great for the economy. So why do we keep buying more and more gold?

Why is gold preferred over other investments?

Gold is one of the most trustworthy assets. If the economy is down, the inflation is rising, and markets are falling, the gold prices are set to be rising. Mainly because if people cannot trust to invest elsewhere, they invest in gold, increasing the demand for gold exponentially.

In current times, as we face economic uncertainties because of ongoing conflicts at a global level, the economy is suffering causing stock market prices to fall, and gold prices to rise.

What is an alternative to buying gold?

Most Indians, when considering investment in gold, prefer to buy physical gold in form of jewellery, or blocks. An alternative to this is investing in Gold ETF.

Just like individual stocks, investment funds known as ETFs (Exchange Traded Funds) are traded on stock exchanges. ETFs invest in a diverse range of assets, including currencies, commodities, stocks, and bonds. Specifically, gold ETFs invest in actual gold or derivatives of gold, including futures contracts, to track the development of the gold price.

Investors who invest in gold ETFs buy shares of the fund, which are traded on the stock market and whose value is based on the price of gold.

Gold ETFs offer an easy way to invest in gold without owning physical gold. Investors can easily buy and sell Gold exchange traded funds on the stock exchange, making them more liquid than physical gold. They also offer lower costs compared to other gold investment options.

List of the Best Gold ETFs to Invest in India

Here is an educational list of the 10 best gold ETFs for investment in the Indian Stock Market:

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.