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Hi folks,

Let me be honest and say I never had any investment in Gold (Apart from what family purchase jewellery on various occasions). And Jewellery as most says is not an investment instrument.

Actually my requirement is liquidity. SGB is the best but it doesn't offer the quick liquidity as volumes are low. So inclined towards gold ETF. Few Qs I have are :

1) Are the ETF prices we see for 1gm gold? If so, then why we see prices low and not same as 1gm physical gold? Currently HDFCMFGETF is treading at 4425.
2) How is price determined for ETF? Is this similar to NAV in mutual fund?
3) Does bank guarantee gold price for ETF ? Can we get delivery of physical gold if hold ETF?
4) Any safety concerns with ETF?

I'm not worried about the taxation part as I'm okay to pay short term gains/loss if any. Also, I'm looking for 1-3yrs kind of horizon to hold and Holding period could be more but this depend on how future events pan out.

Thanks
SE

Think of it as mutual fund NAV. Each Gold ETF has different price. All you need to know is -> if Gold goes up 10%, HDFCMFGETF will be at 4867

The bid/ask quotes that you get real-time is based on Gold price movements during the day. These quotes are given by "market makers" in that ETF.

No. You get price exposure to Gold, that's all. The fund house buys and sells physical Gold. But no, HDFC mutual fund will NOT be carting truckloads of Gold bars in and out of their corporate office. There are reputed third party intermediaries hired by the fund house to manage storage and physical movement of Gold.

No safety concerns as such, but watch out for wide "bid/offer spread". This is the difference between "Bid" price and "offer" price, that goes into the pocket of the market maker if you make a large investment without using 'limit order'.



If you did not understand the previous statement, it is best to invest in Gold mutual funds instead. :) There are no such issues in Gold MFs.

Thanks a lot! Good point to keep limit and not leaving it at market rate while buy/sell to avoid higher spread. I'm interested particularly in ETF due to last two points and expect it to do better if need to exit within a year.

One more Qs here, whats the difference between below two SGBs? They are like ~100Rs apart.

Regards
SE

The infographic is not accurate. HDFC Gold mutual fund basically invests in HDFC Gold ETF (at a particular time of the day). So there cannot be big difference in costs.
https://www.valueresearchonline.com/...d-direct-plan/

If you invest in 'regular plan' of a Gold mutual fund, then you are just paying distributor commissions - not management cost. The expense ratio of HDFC Gold MF (direct plan) is just 0.1%. When investing in Gold MFs, invest in zero commission platforms like Zerodha Coin or MF Utility or invest directly on MF website.

There are disadvantages of Gold ETFs (which are not there in mutual funds):

- You pay brokerage when you buy Gold ETF (but this can be avoided if you use zero brokerage platform like Zerodha)
- You pay the market maker (even if you use limit order) when buying and selling. This is called SLIPPAGE.

Over a period of time, your transaction costs in Gold ETF and Gold MF will be nearly the same.

Thanks again! I use Zerodha coin and kite platform for MF and ETF, so no brokerage or regular plans. Wanted to avoid that exit load if any before a year in MF, in case if market crash and get an opportunity to enter. Slippage could very much possible based on quantity to sell and delta between buy/sell prices by market makers. Will try to diverse in multiple ETFs to avoid high volumes in particular ETF.

These are different series SGB issued by GoI at different times, as per the prevalent market rates. I believe one was issued during Oct (series VII) and the other in Nov (Series VIII).
The difference is due to difference in issue price, which is described as

Thanks for the info! But both seems to be maturing in 2025 with one month apart, so the question is, isn't its better to buy the one which is available cheaper? Do you see any issue with this?

Regards
SE

Is there any risk of landing with a fake? I wish to order and gift a 5 gm gold bar.

MMTC-PAMP has their own page on Amazon.in
https://www.amazon.in/s?me=AZ9EEYCKM...=A21TJRUUN4KGV

Before buying, look for "sold by MMTC-PAMP, fulfilled by Amazon" line:

Buy from bhima jewellery website.They will ship anywhere and have a variety of 22k and 24 k gold coins and bars in various gram sizes. No worry of fakes there.

Disclaimer: I am in no way connected to bhima or represent them. I do however always buy gold form them only.

Has anyone bought SGB from open market via trading accounts like ICICI-Direct?

Wondering is it a good idea to pick some of Nov,2020 SGB units which is trading currently at INR4,832? AFAIK the interest will be calculated based on issue price which was 5127? And does ICICIDirect charge brokerage on such a trade?

I have never invested in SGBs prior to this, so looking to explore that option.

Yes, i have bought few units from HDFC Securities. Small brokerage charge will apply. Exact brokerage amount may vary with different brokerage accounts.

Interest will be calculated on the full face value of the issue, which is 5177 for Nov 2020 series.

Do you need to have some different Demat Account for purchasing SGBs in the Secondary Market? I have a Demat Account with IDBI through which I buy/sell Stocks only.

Regular demat/trading account is sufficient.