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Dipping my toes in Gold (ETF, not bullion)

August 16th, 2007 | Tag(s): | Popularity: 5% [?] |

First, a relative strength chart that compares (US) gold prices with the Sensex & S&P 500:

Gold vs. BSE Sensex-30 and S&P 500

There is no doubt that while gold may not have risen dramatically as an alternative asset, it has held its own over the past few weeks, even as most equity markets have tanked. With the Indian rupee reversing trend, and expectations of seasonal bullishness, I went ahead and initiated a position in gold.

By gold, I don’t mean jewelry, 10g/100g/1kg biscuits or such - but the gold exchange traded funds, specifically the UTI Gold ETF. Why UTI and not the ETFs by Benchmark or Kotak?

  • It’s more liquid
  • It’s cheaper (no entry/exit load, 1% expense ratio)
  • The symbol is cool - GOLDSHARE :-)

I got in at 887 per share and plan to build a bigger position, but first need to see if & how the precious metal (or barbaric relic?) responds to the credit crunch.

5 comments:

  1. thomas [August 16th, 2007]:

    Thank you for your post.I was planning to invest in gold ETF myself and had decided on benchmark etf (my simpleminded reasons were benchmark is an organization which does only ETF and nothing else so they must be knowing about what they are doing ,UTI is a fund house that had to be bailed out and their other funds are going to do terribly once 2008 hits and the subprime fears grow to their full proportions but hey i am a medical doctor who is only a few years into reading about finance ,have very little money ).But your post gave me pause .I have been reading your blog for sometime and have come to respect your views.The fact that u neither a “registered stock broker or an investment advisor” makes u EXTREMELY CREDIBLE in my humble opinion.I liked your post comparing the rupee against gold and how it has fallen 60% in value and today the RBI has come out with a 20% increase in money flows.Struck a cord with my inner gold bug.Hope not too many people are swayed by your article and increase the price of gold when i am going to buy it.Before I end my rant , i want to thank you very much for the effort u are putting into this ,i appreciate it very much and I wish you the best in your new venture moneyoga (u might want to look at commodities too - I would like to trade commodities but it is too complex for me-is it me or is it too complex for real I believe along with the great Marc Faber and Jim Rogers that commodities is the new s$$t but what to do -my 50 grand war chest is invisible in the world of commodities.)

  2. karthik [August 17th, 2007]:

    I would like to know how you have bought Gold ETF(especially UTI ETF).
    I have icicidirect trading account? is it available there? Please guide me.

    Karthik

  3. Kaushik [August 18th, 2007]:

    You can buy it just as you would buy any other stock. Use the NSE Symbol (GOLDSHARE). Or if there is a symbol search in ICICI Direct, search for UTI Gold Fund.

  4. Pooja [April 27th, 2008]:

    I’m not sure what makes you say that there exists entry load for Gold ETFs other than UTI. As per the ODs on websites of Benchmark, Kotak and Reliance there is no entry load when units are bought from the secondary market. The entry load was only during the NFO period ( for UTI it was the highest!! )

  5. Rama Gowda [May 12th, 2008]:

    NRIs who are using PIS (Portfolio Investment Scheme) can not buy Gold ETFs on ICICIDirect.com. I have queried them and answer was that their risk management team dicided not to offer Gold ETFs to NRIs under PIS scheme. But others its really great diversified and risk free investment.

    Regards
    RK

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.
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