In the recent times, the volumes in Exchange traded commodities have been steadily increasing. Growing importance of commodities as an asset class coupled with rapid increase in investment options has been the major trigger behind the upturn in the volumes.
There are two ways in which one can trade in commodities – One is trading in physical quantities directly, and second is trading through commodity derivatives.
Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts. Most commodity markets across the world trade in agricultural products and other raw materials through contracts based on them. These contracts can include spot prices, forwards, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, swaps, or ocean freight contracts.
Gold historically has long been a commodity of safe haven, to which people have flocked to in times of uncertainity, apart from the obvious precious metal appeal it carries. It is also a hedge against inflation. Since bottoming out at USD 253 in mid 1999, gold has given a compounded annualised return of 14.3% in US dollar terms till December 2012.
Gold ETF is a security listed on the stock exchange available for trading with an intention to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold. Buying Gold ETF is purchasing gold in electronic form. You buy them just like you buy stock of any company from your broker.
WHY GOLD ETFs ?
• Cheapest form of pure physical gold with no premium or making charges.
• No issues of wastage or impurities like in the case of physical gold.
• Better liquidity
• Can be purchased or sold anytime at transparent real time price
• Better than mutual funds – can be bought and sold anytime during the day
• Safety and security- no worries of theft and also save on locker charges
• Helps in Portfolio Diversification
• Benefit on long-term capital gains
• Easy to buy in small lots, 1 unit at a time. (1 unit = 1gm of gold price in spot)
WHY IFM ?
Innovative Financial Management provides you a software - Neat On Web (NOW) distributed by NSE where you can trade in ETFs on NSE on real time prices without any time lag. An Equity Back office is provided where you can verify your transactions thus maintaining complete transparency in the system.