Gold ETF are probably the easiest way to deal in gold , be it buying , ensuring the purity , storing or finally selling . All these featues made Gold ETF extremely popular and investment advisors also started recommeding it since, a person dealing in stocks can so easily diversify into Gold without any extra expense.
Once the Gold ETFs started being popular , a whole lot of AMCs jumped into this bandwagon , though there is hardly any differentiation between the product offered .
The way the Gold ETFs works is the AMC would buy gold and issue ETF units to the Investor and each unit would represent 1(One) gram of gold . The physical gold bought by the AMCs is stored with a "Custodian" and in case of Gold ETFs this is "Bank of Nova Scotia" .
Just do a casual search on "Bank of Nova Scotia" and you would find troubling stories on the way Bank of Nova Scotia has handled these gold .
I recently saw an article , that SEBI has directed "physical verification of gold underlying the Gold ETF units shall be carried out by statutory auditors of mutual fund schemes and reports to trustees on half-yearly basis" This is a good move , If it can be implemented .
All that i would like to say for now is "Invest with caution"
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