Gold ETFs streamline investment for Indian investors

Gold Exchange Traded Funds (ETFs) are becoming increasingly popular in India. They allow investors to gain exposure to gold without having to physically store it. This makes them safer, as there is less risk of theft or damage. India is expected to consume about $70 billion worth of gold in 2025. Despite concerns over the country’s growing current account deficit, gold remains a crucial asset for many Indian households, especially during economic downturns. The World Gold Council estimates that Indian families collectively own around $2.5 trillion in gold, which has increased in value over the past year. This rise in gold prices, exceeding 38%, has helped offset losses seen in the stock market. Cultural views often discourage Indians from selling their gold, making ETFs an attractive alternative. If households invested more into gold ETFs, it would improve liquidity and provide easier access to funds. A government initiative encouraging a portion of gold holdings to shift into ETFs could also promote better use of gold and tax compliance. Gold ETFs are seen as cost-effective and secure investment options. They are regulated by India's Securities and Exchange Board, ensuring that the gold in these funds meets strict purity standards. Unlike physical gold, investors can trade ETFs on stock exchanges, making buying and selling quick and easy. Investment apps make buying gold ETFs as simple as a swipe on a smartphone. Investors can also use systematic investment plans (SIPs) to gradually build their gold holdings, allowing them to invest smaller amounts regularly without needing to buy a full unit at once. The market value of ETF units reflects the equivalent amount of physical gold owned. Investors should consider how their ETFs compare to the current price of physical gold to understand their holdings better. Additionally, it’s important to choose reputable asset management companies to ensure proper fund management.