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Gold ETF trade blooms on NSE

Riding high on growing demand for gold, the turnover of gold ETFs (exchange-traded funds) on the National Stock Exchange (NSE) more than doubled in the last fiscal.

business Updated: Apr 25, 2011 00:59 IST

Riding high on growing demand for gold, the turnover of gold ETFs (exchange-traded funds) on the National Stock Exchange (NSE) more than doubled in the last fiscal.

Gold ETFs allow investors to buy and sell the yellow metal in electronic form. Its returns are linked to the domestic price of physical gold but spare investors the trouble of buying and keeping the metal in physical form. Each gold ETF unit is roughly equal to the price of 1 gm of gold.

The total traded value of gold ETFs on the NSE surged to Rs 4,074.3 crore in 2010-11 against Rs 1842.4 crore last year. Their total traded value on the exchange stood at Rs 14.0 crore for 2006-07 and grew to Rs 478.8 crore in 2007-08 and then to Rs 1172.3 crore in 2008-09.

Around 10 asset management companies currently offer gold ETFs.http://www.hindustantimes.com/images/HTPopups/250411/25_04_biz4.jpg

Anticipating a robust demand in gold as an investment option, the NSE has now also launched a dedicated website to spread investor awareness about the sale and purchase of the yellow metal in electronic form.

The NSE plans to provide the initial gateway through the website, nsegold.com, for sale and purchase of Gold ETFs. It will allow investors to check the latest price of these products and also submit their interest in buying gold ETFs.

The returns on gold ETFs are linked to the domestic price of real gold.

Gold ETFs’ asset under management — the value of existing investments in these investment schemes — stood at Rs 4,400 crore as on March 2011, a whopping increase of 176% since March 2010.