Gold BeES
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Transcript of Gold BeES
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Gold BeES
Gold BeESGold Exchange Traded Fund
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Gold BeES
Exchange Traded Fund (ETF)
ETF is an open ended fund which is traded
on exchangeFirst ETF was introduced in US during 1993
Since than it has been growing at more 60%per annum.
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Gold BeES
ETF Advantages
Real Time trading v/s end of the day prices
Easy availability through stock exchanges
Long term share holders do not subsidize
transaction cost of short term tradersLow cost
Available in lower denomination
Convenient for long term holding
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Growth of ETFs
Growth of International ETFs
-
200
400
600
0
100
200
300
400
500
600700
AUM $ Billion No. Of ETF
AUM $ Bil li on 1 1 2 5 8 18 40 74 105 142 212 310 417 487
No. Of ETF 3 3 4 21 21 31 33 92 202 280 282 336 453 596
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Jun-
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Growth of ETFs in India
Growth of ETFs in India
0
1000
2000
R
s.
C
ro
res
0
2
4
6
8
Assets
No of ETF
Assets7 206 333 611 868 1200
No of ETF 1 5 6 6 6 6
Dec-02 Dec-03 Mar-04 Mar-05 Mar-06 Jul-06
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Time line for Gold ETFs
May 02 Benchmark Files OD for the first ETF in the world with
SEBI
Mar 03 Gold Bullion Security launched in Australia
Dec 03 Gold bullion Security launched on LSE
Nov 04 Street Tracks Gold ETF launched on NYSE
Nov 04 New Gold Bullion Debentures listed in SA
Jan 05 I shares Comex Gold Trust on NYSE
Nov 05 Lyxor Gold Bullion Security listed on Euro next
Aug 06 Additional Listing of Street tracks in MexicoMar 06 ZKB Gold ETF listed in Switzerland
Awaited ETF introduced in India
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Current Size of Gold ETFs
Name of Gold ETF AUM in
tonnes
Gold Bullion Security Australia 9.78
Lyxor Gold bullion Security launched on LSE
Street Tracks Gold ETF launched on NYSE
New Gold Bullion Debentures listed in SA
I shares Comex Gold Trust on NYSE
ZKB Gold ETF listed in Switzerland
78.19
390.52
9.89
43.13
1.53
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Gold BeES
Why Gold BeES
India is the World's largest gold consumer
Higher investment consumption of gold in
IndiaSocial compulsion of saving in gold for many
Indians
Potential hedge against rupee devaluation
C S i
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Gold BeES
Current Scenario
Gold is acquired and stored in the form of
Jewelry, Bars, Coins, Gold Deposits, Gold
Accumulation Plan and now WarehouseReceipts
GAP, GDS and WRs can be classified as nonphysical
Out of this GAP is in unorganized sector, GDS
in current for is very restrictive and WR is
having higher denomination
C S i
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Gold BeES
Current Scenario
There is need for an instrument which has
Small denomination
Cost efficiency
Convenience for long term holding
Greater uniform availability
Liquidity
Gold BeES Can fulfill this
T M k
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Gold BeES
Target Market
Gold BeES will be targeted
savers and it is intended work more like very
flexible Gold Accumulation plan
investors who would like to use gold as
portfolio diversification and long term storeof value
G ld B ES St t
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Gold BeES
Gold BeES Structure
Gold BeES will invest in physical gold
One unit will represent one gram of gold(approx Rs. 950)
G ld B ES St t
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Gold BeES
Gold BeES Structure
The units will be listed on NSE and closely
track actual spot gold prices
Continuous arbitrage by Authorised Participantsbetween spot gold and Gold BeES will keep
prices in line
G ld B ES O ti
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Gold BeES
Gold BeES Operations
Secondary market
Seller
Buyer
NSE
Cash
Primary market
Gold BeESCash
Buy / sell
Market making /
Arbitrage
Fund
Authorised
Participant
Redemption
in-kind
(Physical Gold)
Creation
in-kind
(Physical Gold)
Gold BeES
Ad t
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Gold BeES
Advantages
Small unit size for accumulation
Will remain in demat form hence no risk of theft
No worries about purity of gold
Established procedures for putting Gold BeES
(demat security) as collateral for borrowing
Ad antages
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Gold BeES
Advantages
Listing of one of the most popular
commodity linked fund on NSE
It will introduce many new investors to
NSE / NSDL/CDSL who have never
traded on NSE before or opened DPaccounts
World wide already gold ETFs aresuccessful
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Gold BeES
Thank You