Wednesday, 25th January 2006 (3680 views)

Indian consumers will soon be able to invest in gold on paper following a recent amendment by the Securities and Exchange Board of India (SEBI).

The SEBI yesterday (January 24th) tweaked its regulations so that mutual funds can invest in gold and gold-related instruments.

It is anticipated that fund managers will jump at the chance of introducing gold funds as the price of the yellow metal continues to surge.

Gold funds will also offer Indian consumers benefits over trading on commodities exchanges.

"Not too many people can trade on the commodities exchange as the entry barrier is large," one fund manager told India's DNA.

"The contract sizes are big, and there is the price volatility risk. Here, there's nothing. Just buy units and relax."

Investing in gold on paper also offers obvious security advantages over investing in gold jewellery.

The SEBI said that initial issue expenses attached to any gold exchange-traded fund shall not be more than six per cent of funds raised through the scheme.

 

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