Gold & silver ETFs shine on Dhanteras as volume spikes 5x

Mumbai: Exchange traded funds tracking gold and silver prices witnessed a five-fold surge in turnover on October 29 – when Dhanteras, which marks the start of Diwali, was celebrated. Better tax structure for these products and strong returns in the recent past prompted investors to buy gold and silver ETFs on that day, considered auspicious for buying precious metals.

The combined turnover of gold and silver ETFs stood at ₹428 crore on October 29 as against ₹89 crore on the eve of Dhanteras last year. While gold ETF volumes surged from ₹65 crore to ₹236 crore, silver volumes jumped from ₹23.6 crore to ₹191.6 crore. ETFs are bought and sold like listed stocks.

“The sharp rally in the price of gold and silver, buying by central banks, geopolitical tensions and the US elections led to higher interest amongst investors,” said Arun Sundaresan, head – ETF, Nippon Life India Asset Management.

In the past month, gold prices rose 4.2%, while that of silver surged 7.5%. In last one year, gold prices have gained 28%, while silver prices are up 36% in rupee terms. While gold is attracting buyers as a haven against geopolitical tensions, silver is attracting investors due to its industrial demand and applications in green fuel technology.

Some distributors point out that recent changes in taxation and no fresh issuances of sovereign gold bonds (SGB) are also drawing investors towards gold and silver ETFs.

“Investors who sell gold or silver ETF will have to pay a long-term capital gains tax of 12.5% after one year, compared to the earlier rule of slab rates,” says Nikhil Gupta, founder, Sage Capital.