6 replies on this article “GOLD ETF”

1. BanyanFA says:

   April 14, 2012 at 2:28 pm

   Hi All,
   I did a lot of research on how ETF’s work and I can confirm that Santosh is right. It is basically due to the way ETF structure is created and operates. I have written a very detailed article on this http://insight.banyanfa.com/?p=635.

   And this is true for all ETFs, not only Gold ETFs. There is a small table at the bottom of the article mentioned in the link above where you would see the difference between the NAV of the ETF and it’s quoted value.

   Regards
   BFA

   Reply
2. ashal jauhari says:

   March 2, 2012 at 9:06 pm

   Dear Santosh, I feel you are comparing the future price of gold on MCX with the current price of Gold ETF.

   Please check & confirm.

   Thanks

   Ashal

   Reply
3. bharat shah says:

   February 29, 2012 at 5:14 pm

   i think , the etf gold unit value will diminish at rate of @1% p.a. till you hold it due to expense ratio by the AMC. SO i think, the price of etf unit would be lower compared to mcx gold price on long run.

   Reply
4. BanyanFA says:

   February 29, 2012 at 2:06 am

   Santosh,
   I am really surprised to read that you spotted that ETF prices were not in correlation with the MCX Gold prices. ETFs are positively correlated with Gold prices quoted on MCX. If they were negatively correlated as you have mentioned, then there would be an opportunity to take advantage by arbitrage.

   Regards
   BFA

   Reply
   1. Santosh says:

      February 29, 2012 at 2:47 pm

      Hi BanyanFA,

      If you see price of gold on MCX Feb 29, 14:37 it is 28830.00 down (Rs -45.00) or (-0.16%)
      while the price of BEES GOLD ETF on Feb 29, 14:41 it is 2747.99 Up (Rs 11.97) (+0.44%)

      I am not sure if I am comparing the right numbers, and not comparing apples to oranges.

      May like Ashal jauhari mentioned it might be due to mis match in demand vs supply.

      My doubt was in case in future if I was to sell the GOLD EFT units to purchase physical gold what is the kind of price different between GOLD EFT price and Physical gold that we can expect.

      Thank your for sharing your thoughts.

      Reply
5. ashal jauhari says:

   February 28, 2012 at 10:52 pm

   Dear Santosh, please do understand, GOLD ETFs are traded just like any other stock in the market. So there may be a situation due to mis match in demand & supply that the price of GOLD ETF is more or less than the physical Gold.

   Thanks

   Ashal

   Reply

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