If it is backed by gold, how to verify?
Zerodha Gold ETF is backed by physical gold 
Regarding verification, @VishalJain can explain this better
Yes, Zerodha GOLDCASE is backed by physical gold. These are 1kg LBMA approved gold bars stored in a vault. As per the regulatory framework, physical verification of gold needs to be conducted by the statutory auditors of the schemes half-yearly. Accordingly, statutory auditors of Zerodha GOLDCASE have concluded the physical verification and certified the same.
4 Likes
Thank you for reply. Do share links for these audit reports, if available publicly.
The goldcase price has been oscillating in a range since Apr, whereas the gold price has increased by 25%. It is a huge loss with investment in Goldcase. Any reason and/or explanation from Zerodha, why Goldcase price is not increasing with the Gold price?
Domestic Gold prices fell by more than 8% after a 9% cut in import duty on Gold which was announced during the union budget this year. The outperformance that you’ve seen in International Gold prices as compared to domestic prices is precisely due to this reason.
Gold ETFs and SGBs track prices of physical Gold locally.
This is the performance comparison of GOLDCASE for your reference:
Thank you for the clarification
@VishalJain Thanks you for assurance that
Moreover, I have two queries
- whether can I get physical Gold whenever I wish to exit ? or I have sell it on exchange only?
- I want to understand methodology for GOLDCASE as all Gold ETF have their price allied with gold Rate with decimal whereas GOLDCASE stared with NAV Rs 10. So, can’t co-relate with gold current price? for example if gold price is Rs. 70,000/- then TATAGOLD have ETF price Rs 7 which is 0.0001% of Gold Price or GOLDBEES have Rs. 70 which is 0.001%…so it can correlate with gold price. but when in GOLDCASE hard to correlate.
Request you to please explain.
-
As per regulatory mandate, large investors can directly purchase / redeem from the fund in “Creation unit size” subject to the value of transaction is greater than the threshold of ₹ 25 crores or such other amount as may be specified by SEBI from time to time.
-
The methodology for determining the NAV of the Gold ETF depends on the creation unit size. As far as GOLDCASE is concerned, the ETF’s creation unit size is 6,30,000 units. Given we wanted to launch our ETF at ₹10 we fixed this particular creation unit size, as gold prices were trading around the ₹63,000 mark for 10 grams. While investing in Gold ETFs, better to look at value rather gms as correlation with gms and NAV will keep changing based on the expense ratio, tracking error of every Gold ETF.
Hope this helps!
1 Like
Are the audit reports of Physical Gold available online? Please share the link to the same.
Hey Krin, the audit reports are not publicly available. However, the auditor presents this independently to the trustees of the mutual fund. You could also refer to the audited annual report of the scheme which is certified by the auditors and contains the physical gold holdings of the scheme.
3 Likes
Hello @VishalJain
Gold mutual funds and ETFs both pay 3% GST during the purchase (buying of Gold bars) and redemption of GOLD Units (selling Gold bars)?
Vishal Ji,
As a follow up, what is the frequency of purchase of gold by the fund house?
And i presume you hold the gold in india.
TIA
Krin
HI Krin, i presume your q here is relating to the Gold ETF which is a passive fund and is therefore deployed in 1kg LBMA Physical bars of Gold of 99.5% purity to the max limit possible. In addition, subscriptions/redemptions are usually done through an in-kind process where additional units are created when market makers deposit the approved Gold for exchange of units. Yes, the Gold is held in India. Rgds
1 Like
Hi Vishal,
As a follow-up to my earlier QST on Gold ETF,
there are discussions on a potential situation where physical deliveries might not happen due to gold shortage and custodians might just issue currency equivalent, being helpless.
Also, if US decides to re-price gold, it could cause another shock.
Both could be edge cases, but point towards risks with GOLD ETF’s while favouring physical gold.
How is Zerodha addressing this issue? Thanks in advance for the clarification.
Hey, if there is a Gold shortage and market makers cannot then the Gold ETFs would trade at a premium, similar to what would happen in the physical market. For the rest of your concerns, not sure if US can reprice Gold as the Gold market is large and prices are driven by demand and supply. In terms of there being risk to physical Gold, we are governed by SEBI guidelines and the industry at large will have to take it up with the regulator at that point of time. Difficult to comment at this point. Rgds
1 Like
Hey, I am a new investor in GOLDCASE. I am little confused with the mathematics of creation unit size. I mean if I have 5000 units of this ETF, how much gram equivalent of physical gold can be said to have owned by me (vitually ofcourse)? Is it possible that a retail person can redeem these units for physical gold if 1kg physical gold equivalent of GOLDCASE is held by him/ her? and how many GOLDCASE units = 1kg of physical gold equivalent? please clarify
Hi Amitabh, if you have 5000 units of GOLDCASE, it approximately equates to 7.88 grams of physical gold (0.00158 grams per unit). To your second question regarding redemption in physical gold, as per SEBI regulations, only large investors can directly purchase / redeem from the fund in “Creation unit size” subject to the value of transaction is greater than the threshold of ₹ 25 crores. The creation unit size of GOLDCASE is 6,30,000 units which constitutes 1 Kg of physical gold.
1 Like
Thank you Vishal Sir. Got my answers 