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Topic : Personal Finance
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GETF vs Physical gold

Created by : Padmanabhan R, Articled / Audit assistant, Finance student  | 07 02 2009 22:13:10 +0000
Industry : Asset Management
Keywords : getf vs gold
Activity:  867 views;  last activity : 10 10 2011 06:54:31 +0000

Gold Exchange Traded Fund is a mutual fund listed and traded on a stock exchange that tracks the price of gold. Should we prefer the virtual form over the physical form? 

 
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The advantages of virtual gold over physical are higher liquidity and avoidance of costs. Issues regarding purity and storage cost are important disadvantages of physical gold.  GETF are traded in small units and so attract retail investors.

The most contrasting aspect is sale. Capital gain on sale of physical gold is considered as long term only when it is held for more than 36 months, where as in the case of GETF a holding period in excess of an year is enough as GETF is a financial instrument. All advantages of physical gold like diversification, minimal volatility, hedge option etc are also advantages of GETF.


By Padmanabhan R, Articled / Audit assistant, Finance student  07 02 2009 22:13:10 +0000
 
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This is for you Aditya: 

Disadvantages to Gold ETF’s are that they are often not as liquid as physical gold is.  Also, if the fund ever needed to be liquidated, there is the possibility of fraud by the manager of the ETF.  If a Gold ETF went belly up, the fund’s gold position would be liquidated, often at a loss, and then the proceeds would be divided between the shareholders.  The shareholders would be paid in cash, and not in gold, and depending on the value of the dollar that could cause a further loss.  However, on the positive side, if the market did go belly up, having an investment based on gold would be a much better investment than one based on an investment that has no intrinsic value"..... courtesyhttp://www.tradegoldonline.com/ETFS.html

:))
By Makrand Bhave, Marketing & MICE, WIZCRAFT International  07 10 2009 14:38:38 +0000
Arguments in: "GETF vs Physical gold"
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most of us never sale physical gold, so for trading GETF is better.
By Vivek Kumar Srivastava, Competence development Manager-Global Services , NSN  | 10 10 2011 06:54:30 +0000
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This is a very good alternative investment method on the yellow metal. it is going to change the way we make our investments and make them more safe
By vincent prem kumar, MBA/PGDM student, BHARATHIDASAN INSTITUTE OF MANAGEMENT  | 10 08 2011 05:07:25 +0000
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I AGREE WITH MR. JAY MAKWANA'S ARGUMENT.
By SB DIKSHIT, STATE QUALITY MONITOR, U.P.R.R.D.A  | 07 10 2009 17:12:08 +0000
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Iam not against GETF. But the point is nobody has yet said the disadvantage part of GETF. If looks it is a referendum in favor of GETF. Lets wait and watch.


By Aditya Sharma, Insurance Advisor/Analyst, LIC OF INDIA, ICICI LOMBARD  | 07 10 2009 14:25:27 +0000
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but how manywill set aside physical consumption?as of now many buy it to wear,,may be time pass by , it will become attractive 
By vijayasaravanan , Partner, MS Contractors and Amway Business Owner  | 07 06 2009 17:52:07 +0000
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Physical Gold needs to be kept at safer places for which all need to have a Bank Locker...so GETF is definetly a very good investment option that offers convenience with security and safety...  
By Jay Makwana, Media Development Manager, Times of Oman  | 07 06 2009 04:54:09 +0000
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I also support GETF. Indians account for 23 per cent of the world's total annual demand for gold and now we have got one more way to invest in the yellow metal.

Gold ETFs have been a much-anticipated development. These will address issues of higher prices, purity, costs of insurance and storage, and liquidity associated with investing in physical gold.They are open-ended mutual fund schemes that will invest the money collected from investors in standard gold bullion (0.995 purity) which will be listed on a stock exchange and are designed to provide returns that would closely track the returns from physical gold in the spot market hence, not geared to exploit positive or negative trends.
By Esha Johar, Risk Analyst, Irevna  | 07 04 2009 06:26:18 +0000
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Yes even i think GETF is better than Physical gold for that matter, India is always has a history of using more gold than anyone else, it was almost 750 tonnes of gold being consumed last year, And now after GETF comenced from 2007 we can see that more people are turning towards GETFs as it is a safer option as compared to physical gold. With the GETFs there is also no problem of storage unlike in the case of physical gold as its ownership is recorded electronically.
By Jyoti Rath, Sr. Associate, Barclays  | 07 03 2009 12:51:54 +0000
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That is amazing !!
By Makrand Bhave, Marketing & MICE, WIZCRAFT International  | 07 03 2009 02:20:53 +0000
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Physical gold has more liquidity compare to GETF but only than when it kept for longer period of time.But from the invesment point of view GETF is not totally be ignored.It depends whether the Investor is Active or Passive investor.
By Suman Kumari, MBA/PGDM student, Banasthali University  | 10 09 2011 19:26:24 +0000
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Thank you all for sharing your views,

@   Aditya Sir (Disadvantages)  GETF are exposed to all the risks that investment in gold faces. And like Makrand Bhave sir said there can be liquidity problems( as they are not as popular as gold is) and are subjected to fraud by fund managers.

 In addition there are fund management costs and expenses and being bought and sold on stock exchange they are subject to a bid ask spread.
By Padmanabhan R, Articled / Audit assistant, Finance student  | 07 10 2009 19:14:57 +0000
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