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Mallika Mathew Faculty Department of Management Studies Toc H Institute of Science & Technology
Introduction
India is the worlds largest gold consumer market. Gold is seen a sign of security as well as sign of prosperity. Gold is considered as form of money and is considered as one of the foundation assets for an Indian household and a means to accumulate wealth. In 2009, India accounted for 15% of the gold global market. Over the past 10 years the value of gold demand in India has increased at an average of 13% per year outpacing the countrys real GDP, inflation and population by 6%, 8% and 12 % respectively.
Gold Jewellery accounted for 75 % of the total Indian gold demand, the remainder being investment (23%) and decorative and industrial (2%). During first half of 2010,Indian net retail investment in gold increased by 264% to 93 tonnes.
To study the new product Gold ETF To study the competitive advantage of Gold ETF with respect to Physical Gold
Structure of ETF:
3 4 5 6 7 8 9
Buying Premium above gold price Making Charges Impurity Risk Storage Requirement Security of Asset Resale Convenience in Buying / Selling
Investor is responsible Banks do not buy back Less convenient, as Gold needs to be moved physically Can t Sell Back Yes, possible Yes Only after 3 years
10 11 12 13
Bid Ask Spread Risk of Theft Wealth Tax Long Term Capital Gains Tax