Very interesting article in DNA today: Gold ETFs lack lustre for MF distributors
. . . in addition to the slump in gold prices, lack of interest from MF distributors is the key reason for the pause in gold ETF offerings (NFOs).
Mutual fund distributors claim that they have nothing to gain from selling gold ETFs. “The entry load has been high for both the NFOs till now. People say, why should I pay an entry load during the NFO when I don’t have to pay any after the gold ETF is listed on the exchange?”
Another distributor laments that if one invests during the NFO, the distributor has to fill in all the know-your-customer documents and hardly gets any commission for the trouble taken.
The money in gold ETFs is made by brokers, when investors purchase and sell units, and not by distributors.
Poor distributors - they aren’t getting a cut of your money, don’t you feel bad for them?
On another note, look at today’s intraday chart for the UTI Gold Fund (GOLDSHARE):
Both charts (one from Yahoo Finance, another from NSE) show a fast drop to 873, followed by a jump to 898 and then back to ~880 as the market opened. In fact, the official low for the day (per the NSE) is 860, although that doesn’t show up in the NSE chart.
What was that all about? A bunch of stop loss and limit sell orders being cleaned up? The rest of the day has seen very tight (and low volume) price action between 880 and 885.