A gold Exchange Traded Fund (ETF) is a financial instrument like a mutual fund whose value depends on the price of gold. In most cases, the price of one unit of a gold ETF approximately reflects the price of 1 gram of gold. As the price of gold rises, the price of the ETF is also expected to rise by the same amount. Similarly, a fall in the price of gold will also be reflected by a drop in the price of the ETF. However, unlike a mutual fund, the units of a gold ETF have to be purchased or sold on the stock market.

GOLD ETF BENEFITS http://www.nsegold.com/

Gold ETF is the smarter way to invest in gold. Here is why….

No Premiums or Making charges

You end up paying a premium for gold coins & bars purchased from banks and jewelers charge extra as making charges. With GOLD ETF, you don't have to pay any premium, making or delivery charges. Yet whenever needed you can also exchange them in multiples of 1kg units for 0.995 purity

No worries of theft

You always worry about the safety of your gold and also end up paying for bank lockers. Buying Gold ETF is purchasing gold in electronic form. You buy them just like you buy stock of any company from your broker. With Gold ETF, since your gold is now in demat form there are no worries of theft and you also save on locker charges.

Easy to sell

Unlike gold coins and bars, which the banks don't buy back and most jewelers only offer to exchange but not buy back. Gold ETFs can be sold anytime through your broker at transparent prices available for view at NSE's website. And unlike other forms of gold, you get the same price for your Gold ETF across India.

On Gold ETF, you pay no sales tax, securities transaction tax, VAT or wealth tax.

NSE Gold stock watch : http://www.nse-india.com/content/gold_etf_sparks.htm