In my earlier article on “Should I invest in Gold?” I had discussed on whether you should invest in gold or not? How to Accumulate Gold for Marriages? and how equity has performed against gold in India? In this article I had also discussed that you should be clear with your objective of buying gold. I mean to say that whether you are buying gold for marriages or investment objective should be clear.

Now many investors also ask than how they should invest in gold. Whether they should buy physical gold or they should buy paper gold in the form of Gold ETF.

First of all let us understand What is Gold ETF? and How it works?

What is Gold ETF?

Full form of Gold ETF is Gold Exchange Traded Fund and as the name indicates Gold ETFs are open-ended mutual fund schemes that will invest the money collected from investors in standard gold bullion (0.995 purity). The investor’s holding will be denoted in units, which will be listed on a stock exchange. Normally we have a common understanding that mutual funds invest only in Equity shares only but that is wrong. Mutual funds also invest in Gold and Bonds.