As more and more Gold based ETF's and Gold based Funds are being launched in India, the tracking error problems, possible inconsistencies in pricing of the multiple gold funds and gold based ETF are expected to be imminent. To avoid these and to have some consistency in the pricing performance, to measure the performance of gold ETF prices in India, CRISIL has launched the CRISIL Gold Index.
Overall, this appears to be a good launch in the gold based product space. more importantly, this is the first ever such index to be launched by CRISIL in the commodities space, so looks like the rating agency is attempting for some real independent, and transparent mechanism for the mushrooming gold based products.
The question that will remain about how the Gold ETF prices be tracked by this index? Will (atleast) the closing prices of all the GOLD based ETF's match those of the CRISIL Gold Index? Will any deviation or descrepancy be attrbuted to the tracking error? Will this CRISIL Gold Index really succeed in becoming the benchmark for the Gold Based products in India, only time will tell. For the time being, the traders who are trading gold based products or investors investing in gold as long term investment product do have an index to check out the performance of their invested product.
As available on the CRISIL website news section, here is the Chart of Historical Values of CRISIL Gold Index (sourced from CRISIL website):
Let's see some Details about the CRISIL Gold Index:
- The values of CRISIL Gold Index are starting from 1st January 2007
- Daily value of this CRISIL Gold Index will be calculated as price of 10 grams of gold in Mumbai market
- Methodology used for CRISIL Gold Index is same as the one which forms the basis for London Bullion Market Association (LBMA) fix price
- CRISIL claims that the method used for calculating CRISIL Gold Index values is according to the SEBI guidelines
- There are some fixing charges of LBMA (0.25 $ per gold ounce) and premium charges (1.5 $ per ounce)
The CRISIL Gold Index is expected to provide an independent benchmark for gold based products pricing in India.
Also, at the time of writing this article, CRISIL also provided the following details about the Returns of CRISIL Gold Index
How many Gold ETF are available in India for Gold trading?
As of now, it is reported that there are 11 Gold ETF's available in India for trading and investments
How many Gold based Fund (non-ETF) are available in India?
It is reported that currently 3 Gold based Funds or Gold Fund of Funds are available in India. We have covered them all in detail: Reliance Gold Savings Fund (See Review & Details), Kotak Gold Savings Fund and the recently lauched and currently open NFO for SBI Gold Fund NFO: Review Analysis & Details
Then, you can also trade E-Gold as a trading and investment product - Trade E-Gold on National Spot Exchange
If you are interested in looking at how Gold prices have performed historically, see Gold ETF: Historical Performace of Gold ETF
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