Srinagar, Jan 4: With gold prices touching Rs 13,000 per gram (Rs 1.30 lakh per 10 grams), the traditional Kashmiri practice of buying physical gold—whether for weddings, festivals, or as savings—is becoming increasingly unaffordable for middle-class families. But there’s a modern alternative that allows even small investors to own real gold without the burden of making charges, storage costs, or security concerns: Gold Exchange-Traded Funds (ETFs).
Why Gold Prices Are Climbing
Gold has always held a special place in Indian, and particularly Kashmiri, households—not just as jewelry but as a reliable store of value during uncertain times. The recent surge to Rs 13,000 per gram reflects global economic uncertainty, currency fluctuations, and persistent inflation. For Kashmiris accustomed to buying gold for occasions or as emergency savings, these prices have made physical gold increasingly out of reach.
A simple calculation illustrates the challenge: buying even 10 grams of gold now requires Rs 1.30 lakh upfront, plus making charges of 8-15% (an additional Rs 10,000-20,000), along with GST. For most salaried individuals or small business owners, this represents months of savings.
What Are Gold ETFs?
Gold ETFs are mutual funds that invest in physical gold and trade on stock exchanges like individual stocks. Each unit of a Gold ETF typically represents one gram of gold (though this varies by fund), held in dematerialised form in your demat account.
Think of it this way: instead of buying a gold coin and storing it in a locker, you’re buying paper units that represent actual physical gold stored securely in vaults. You can buy as little as one unit—equivalent to roughly one gram of gold—making it accessible even to those with limited capital.
How Kashmiris Can Start Small
Here’s what makes Gold ETFs particularly attractive for Kashmiri investors:
Start With One Gram: Unlike physical gold where you might need to buy at least a small coin or jewelry piece, Gold ETFs allow you to start with investment equivalent to just one gram. At current prices of Rs 13,000 per gram, you can begin your gold investment journey with around Rs 13,000-13,500 per unit.
No Making Charges: Physical gold jewelry comes with making charges of 8-15%. A Rs 50,000 jewelry purchase might include Rs 5,000-7,500 in making charges alone. Gold ETFs have no such charges—you pay only the gold price plus minimal brokerage (0.5-1%).
Systematic Investment Plans: Just like a recurring deposit, you can invest small amounts regularly through SIPs in Gold Mutual Funds (which invest in Gold ETFs). Invest Rs 1,000-2,000 monthly and accumulate gold gradually.
No Storage or Security Worries: Physical gold requires secure storage—bank lockers, home safes, or worry about theft. Gold ETFs eliminate this entirely. Your investment sits safely in your demat account.
Easy to Liquidate: Need cash urgently? Physical gold requires finding a buyer, getting it assessed, often selling at a discount. Gold ETFs can be sold during market hours (9:15 AM-3:30 PM) and money reaches your bank account in two days.
How to Invest: A Simple Guide
Step 1:
Open a Demat and Trading Account
You need a demat account (to hold ETF units) and trading account (to buy/sell). Open these with any broker—Zerodha, Groww, Angel One, HDFC Securities, ICICI Direct. The process is entirely online and takes 24-48 hours. You’ll need your PAN card, Aadhaar, bank details, and a smartphone.
Step 2:
Complete KYC
Submit documents online for KYC verification. Most brokers complete this digitally within a day.
Step 3:
Add Funds
Transfer money from your bank account to your trading account. Even Rs 13,000-15,000 is enough to start with one gram equivalent.
Step 4:
Search for Gold ETFs
Log into your broker’s app or website. Search for popular Gold ETFs such as:
– SBI Gold ETF
– HDFC Gold ETF
– ICICI Prudential Gold ETF
– Nippon India Gold ETF
– Kotak Gold ETF
Step 5:
Place Your Order
Enter the number of units you want to buy. Each unit represents approximately 1 gram of gold. You can place a market order (buy at current price) or limit order (set your price).
Step 6:
Hold or Sell When Needed
Your Gold ETF units will appear in your demat account. Sell them anytime during market hours when you need money or want to book profits.
Smart Investment Tips for Kashmiris
Don’t Put Everything in Gold: Financial advisors recommend allocating only 5-10% of your investment portfolio to gold. It’s a hedge against inflation and economic uncertainty, not a primary growth investment.
Think Medium-Term: Gold typically delivers 8-10% annual returns over the long run. It’s best suited for 3-5 year investment horizons rather than quick gains.
Watch the Prices: Gold prices fluctuate daily based on global markets. Buy when prices dip, just as you would wait for favorable rates when buying physical gold.
Consider Taxes: If you sell Gold ETFs within three years, gains are taxed as per your income tax slab. After three years, long-term capital gains tax of 20% with indexation applies. Physical gold follows the same tax rules.
Check Expense Ratios: Gold ETFs charge an annual expense ratio of 0.5-1%. Compare different ETFs and choose one with lower costs and good trading volume.
Kashmir’s economy has traditionally relied heavily on cash savings and physical gold. With limited formal investment culture and banking penetration improving only recently, many families keep wealth in physical form. But with gold prices at Rs 13,000 per gram—historic highs—this strategy has become expensive and risky.
Gold ETFs democratize access to gold investment. A shopkeeper in Lal Chowk, a teacher in Baramulla, or a student saving pocket money in Anantnag can now participate in gold investment with amounts as small as Rs 13,000-15,000. No need to save for years to afford 10 grams of physical gold.
Moreover, during festivals or wedding seasons when gold buying peaks in Kashmir, ETFs offer an alternative that preserves wealth without the premium costs of jewelry.
Gold at Rs 1.37 lakh per 10 grams doesn’t mean Kashmiris must abandon gold as an investment. Gold ETFs provide a modern, affordable, and secure way to own real gold—backed by actual physical gold stored in vaults and regulated by SEBI.
Whether you’re a young professional starting your investment journey, a parent saving for a child’s future, or someone seeking to diversify beyond bank fixed deposits, Gold ETFs offer a practical entry point. Start small, invest regularly, and build your gold holdings over time—without the making charges, storage headaches, or security concerns that come with physical gold.
The gold may be digital, but the security and value are as real as the bangles in your grandmother’s jewelry box.