Gold ETF

Investopedia describes Exchange Traded Fund (ETF) as “a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.” ETFs can be bought and sold through the exchange registered broker on payment of market related brokerages.

BRIEF INTRODUCTION OF ACE GOLD EXCHANGE TRADED FUND (ACE GETF):

Ace GETF is a customized version of international in practice GETF. The main objective of the Ace GETF is to rationalize the domestic gold (bullion) market and establish Gold as a lucrative investment avenue.

PROCESS:

•    Investors interested in investing in gold via Ace GETF shall approach Ace.
•    Ace will issue the Ace GETF Certificate (like Share Certificate) against investor’s money. Ace will hold the
     equivalent amount of gold in its custody.
•    Ace GETF will be listed in the trading floor managed by Ace. Investors can buy Ace GETF from the trading floor
     which is as good as buying from Ace.
•    Ace GETF will hold equivalent gold of 10 grams, 50 grams, 100 grams, 500 grams and 1000 grams or any other
      quantity as decided by Ace.

PRICE OF ACE GETF:

•    Initially, Ace will quote the price for its GETF while issuing the Ace GETF which will be calculated using the pricing
     mechanism developed by Ace based on the international value of gold.
•    Once listed on the trading floor, price will be determined by the market.
•    Basically the price of Ace GETF will be based on international gold price and decided by the floor itself.

BUYING ACE GETF:

•    Investors can approach the designated broker to buy on the trading floor (Trading hours: 3:30 pm - 4:30 pm, Monday
     to Thursday).
•    Investors can drop in at Ace and buy the GETF as per their requirement.

SELLING ACE GETF:

•    Investors can approach the designated broker to trade on the trading floor (Trading hours: 3:30 pm - 4:30 pm, Monday
     to Thursday).
•    Investors can drop in at Ace and take physical delivery of gold equivalent to GETF surrendering the Ace GETF.

BENEFITS OF INVESTMENT IN ACE GETF:

•    Gold is a perfect hedge against inflation
•    Secure and return at par of underlying asset
•    Ease
•    Liquid
•    Pure (Purity of gold is insured by Ace)

RISK OF INVESTMENT IN ACE GETF:

•    Risk of fluctuation of gold price in international and domestic markets.

TRANSFER OF OWNERSHIP OF ACE GETF:

Before placing the sell order with broker, GETF holder should have proper signature verification with Ace in standard form developed by Ace. Broker should submit the GETF in T+2 days for the transfer of ownership through the clearing house of Ace.

PROCESS OF TAKING PHYSICAL DELIVERY OF GOLD BY ACE GETF HOLDER:

If the Ace GETF holder wishes to take the physical delivery of gold, he / she has to submit the Ace GETF to Ace along with a delivery request. Investors will have to wait at least 7 days to take physical delivery of gold. Equivalent physical gold will be delivered to the Ace GETF holders within banking hours, ie, 10 am to 5 pm (Monday to Thursday) and 10 am to 1 pm (Friday). In order to claim physical delivery, the client must have minimum 1 kg of Gold certificate; below 1 kg of Gold certificate can only be traded but the gold cannot be delivered physically.

WHAT IF ACE GETF IS DE-LISTED ON THE TRADING FLOOR:

If Ace decides to de-list the Ace GETF trading on the trading floor, investors will be given the exit opportunity by delivering equivalent amount of gold held in Ace custody.

DOCUMENTS REQUIRED FOR BUYING ACE GETF:

•    Photocopy of citizenship
•    1 photo
•    Photocopy of citizenship of nominee