Why should one invest in a gold ETF?
There are many reasons. It is easier to hold gold and there is no wealth tax on paper gold as in the case of physical gold. Also, long-term capital gains at 20 per cent is applicable after just one year. You can also borrow from a bank against gold BeES (Benchmark Exchange Traded Scheme), also called GB, as it is legitimate collateral. We believe that gold is a very good hedge against inflation, and given the geo-political risk globally, gold is a very good, all-seasons asset. The purchasing power of gold remains constant irrespective of the situation. While gold ETFs’ expense ratio will be akin to that of equity funds, their taxation status would be equivalent to debt funds. Isn’t this a disparity? Not really. Higher allowable expense ratio is irrelevant as gold ETFs will have a lower expense ratio, even lower than debt funds. By virtue of being an ETF is in itself an attempt to keep the expense even lower. GB’s expense ratio is capped at one per cent. Currently the custodian charges
