Gold ETF
A Gold ETF is an exchange-traded fund (ETF) that aims to track the domestic physical gold price. They are passive investment instruments that are based on gold prices and invest in gold bullion. In short, Gold ETFs are units representing physical gold which may be in paper or dematerialised form.
Gold Exchange Traded Funds (ETFs) are a great investment choice if you find buying physical gold prices inconvenient, or if you want to diversify your portfolio. Gold is considered a safe asset, which means that its prices are usually not very volatile.
.
Gold Exchange Traded Funds (ETFs) are a great investment choice if you find buying physical gold prices inconvenient, or if you want to diversify your portfolio. Gold is considered a safe asset, which means that its prices are usually not very volatile.
Gold mutual funds invest in gold ETFs while gold ETFs invest in 99.5% purity gold. Gold ETFs have no exit loads while gold mutual funds charge an exit load when one redeems their holdings before one year. Gold mutual funds allow for SIP investments whereas the same is quite cumbersome in gold ETFs.
Can I convert my Gold ETF into physical gold? Yes, you can do that. But for that you need to have a minimum number units that are worth one kg of gold. This is because the standard size of one gold bar is one kilogram.
While short-term capital gains before the three-year holding period are added to your income and taxed as per the existing slab rate, the long-term capital gains after three years of holding are subject to 20 % tax with indexation benefits.
The IRS taxes dividends and interest payments from ETFs just like income from the underlying stocks or bonds, with the income being reported on your 1099 statement. Profits on ETFs sold at a gain are taxed like the underlying stocks or bonds as well.