Indian Investors Turn to Gold ETFs


"Gold ETFs are the flavor of the season in India."

Mineweb, Shivom Seth

Gold exchange traded funds, also called gold ETFs, are the flavor of the season in India. Investors are rushing to trade in gold ETFs, which allow investment in the yellow metal in non-physical electronic mode.

As the Indian stock market tanks on a regular basis these days, small and wary investors are eager to invest their money in a safe haven. Preliminary figures for gold ETF activity released by India's central bank indicate a continued positive trend, with several new gold mutual funds being launched in the first quarter of the year.

According to the Securities and Exchange Board of India, which is India's capital markets regulator, assets under gold ETFs increased 170% during 2010-11 to $ 976 million (Rs 4,400 crore).

Gold ETFs have been regulated by SEBI since their inception in 2007. SEBI has held that the valuation for gold held by a gold exchange traded fund scheme shall be at the AM fixing price of London Bullion Markets Association (LBMA) in US dollars per troy ounce, for gold having a fineness of 995 parts per thousand.

Data showed that as of March 31, 2011, the number of folios under ETFs, including gold-backed ones, had grown 130% to 442,000 units, while assets had expanded 170%.

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