Gold remains a vital liquidity source even with price drops. Central banks and individuals are selling gold to ease financial strains. In India, investors are shifting towards Gold ETFs for easier and more efficient investment. This trend offers attractive entry points for building gold exposure. Gold ETFs provide transparent pricing and security, making gold a liquid asset.
The recent dip in gold prices hasn’t shaken its core role; it remains a critical source of liquidity when needed. This correction highlights that gold is often the go-to asset, with positions liquidated to offset pressures elsewhere. Even central banks treat it as a last-resort asset: Turkey, for instance, sold nearly 50 tonnes last week1, its steepest weekly reduction since August 2018, to ease economic strains, while Russia offloaded about 15.1 tonnes across January and February 20262 to meet financial pressures. Multiple news reports suggest that residents and non-residents in Dubai are selling personal jewellery and gold bars to create cash cushions, partly due to rising concerns over escalating conflicts. According to reports, some jewellers in Dubai are reportedly seeing over 100 sellers a day, reflecting a noticeable uptick in precautionary liquidations. Thus, despite headlines stoking fear, gold hasn’t failed in times of heightened geopolitical risk; in fact, it has done exactly what it is meant to do: serve as a reliable liquidity source when the system comes under stress.
The forces that have propelled the current bull market have not receded but have intensified. Central banks globally have responded to every crisis of the past two decades by expanding their balance sheets and cutting rates, leaving sovereign debt at multi-decade highs relative to GDP. Each new crisis triggers another round of money printing, gradually devaluing currency and reinforcing the case for hard assets. Geopolitics compounds the picture: energy shocks feed inflation, inflation pressures labour markets, labour market deterioration forces central banks to ease again, regardless of their rhetoric. This is the vicious loop gold investors must understand.
Gold sits at the exact intersection of every one of these forces, the universally recognised store of value that no government can print more of. Looking ahead, as fears of liquidation ease, gold flows and demand will regain momentum, just as they have repeatedly in past crises, from the dotcom bubble to the global financial crisis, and now amid policy and liquidity tightening.
India’s investors are evolving fast While global gold price corrections made headlines, India’s domestic gold ETF market was quietly making waves. In 2025, gold net imports were valued at around Rs 5.13 lakh crore, with investment demand alone contributing nearly Rs 1.2 lakh crore in FY25-26.3 Gold ETFs emerged as a key investment vehicle, attracting almost Rs 66,600 crore over the year.3 ETF inflows surged intensively, from Rs 5,654 crore in Q1 2025 to Rs 23,132 crore by Q4, a four-fold jump in just one year. Even more striking, in January and February 2026 alone, investors poured in Rs 29,295 crore, amounting to 68% of the entire 2025 inflow in just two months.3 These numbers clearly point to a growing trend: incremental investment demand is increasingly channelling through gold ETF instruments.
The underlying appetite for gold remains intact. What is evolving is the format, a steady shift away from jewellery towards liquid, exchange-traded units that can be accessed as easily as equities. Gold ETFs are enabling this transition, providing the structure through which investor behaviour is steadily modernising. Against this backdrop, while a significant portion of inflows came when gold hovered near record highs, the recent 10-15% correction offers a more attractive entry point. It creates room for investors to build or enhance exposure through ETFs while there is an opportunity to do so.
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Gold ETFs: A more efficient route to gold investing in India For many Indian investors, gold is deeply woven into the cultural fabric, from celebrations to inheritance to a sense of financial security. Yet, as an investment, jewellery often falls short. Traditional gold jewellery, while symbolically rich, is structurally inefficient as a wealth-building instrument. The inefficiencies begin at the point of purchase. Jewellery is typically crafted in 22-karat gold rather than the investment-standard 24-karat, meaning investors are immediately exposed to only 91.6% of the metal's intrinsic value. Making charges, which can range from 8% to 25%, add a further layer of cost that has no relationship to gold's market price and is entirely non-recoverable.
Liquidity is the second structural weakness. Unlike a traded security, physical jewellery cannot be converted to cash at the press of a button. Liquidation requires quality assessments, purity certifications, and often involves subjective negotiations with buyers or jewellers. The process is time-consuming, opaque, and rarely results in a fair price. Many investors find that their perceived gains in the metal's appreciation are substantially eroded at the point of sale.
Holding costs compound the problem further. Physical gold requires secure storage, whether a bank locker or a home safe, both of which carry ongoing costs and logistical concerns. Insurance cover, if taken, adds another line item. And at every point of exchange, whether buying, selling, or converting one form to another, a series of charges quietly diminishes the investor's effective return.
Gold ETFs were designed to reduce these frictions. By holding units that are backed by 24-karat physical gold held in institutional custody, investors gain full and transparent exposure to the spot price of the metal. There are no making charges, no purity discounts, no storage concerns, and no asymmetric negotiations at the point of exit. Units can be bought and sold on the exchange at live market prices with the same ease as any listed equity, making gold a liquid asset class for the first time. For investors who want gold to function as a portfolio stabiliser, value preserver against inflation, or a tactical allocation, rather than purely an heirloom, Gold ETFs offer a cleaner, more rational path to that exposure.
Some of the other qualities that gold ETFs possess are as follows:
Accessible: Gold ETFs enable participation with small ticket sizes, making it easier to invest without the need to purchase physical quantities.
Standardised Quality: Each unit is backed by investment-grade gold (0.995 purity), eliminating concerns around purity and certification.
Convenient: Transactions are executed through a demat and trading account, lsuch as equities, removing the need for physical handling or storage.
Transparent Pricing: ETF prices closely track domestic gold prices, reducing the impact of making charges, spreads, and negotiation typically associated with physical gold.
Secure: The underlying gold is held in regulated, insured vaults, mitigating risks related to theft or storage.
Liquid: Units can be bought or sold on the exchange during market hours, offering ease of entry and exit at transparent prices.
Why quantum gold ETF: Staying true to the core of gold Investing Quantum gold ETF holds only physical gold, and no exposure to gold derivatives or forward contracts, ensuring pure, unlevered exposure to the metal.
100% Physical Backing: Every unit issued is backed by physical gold held in custody. There are no gold derivatives, no synthetic exposure, no paper gold.
No Paper Gold: Investment is pure, unlevered exposure to physical bullion.
Monthly Physical Audits: The gold held in custody is audited monthly, rather than quarterly or annually. A dedicated team from Quantum conducts these audits in person each month, reflecting a commitment to investor protection. Physical verification ensures that holdings are real and accounted for; mere statements are not sufficient, highlighting that safeguarding investors’ interests is taken very seriously.
Annual Quality Checks: Beyond quantity audits, the physical gold undergoes yearly quality verification to confirm it continues to meet the 0.995 purity standard. A third-party professional agency and assayer are appointed to carry out all necessary quality checks.
Traded on exchanges: One unit equals 1/100th of a gram of gold, the smallest denomination, making it accessible to investors.
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To conclude, it is time to distinguish between gold as a consumption asset and gold as an investment, while making it a prudent part of portfolio allocation.
Note: The views expressed in this article are for general information and reading purposes only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data, and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and the views given are fair and reasonable as of the date. Readers of this article should rely on information/data arising out of their own investigations and are advised to seek independent professional advice and arrive at an informed decision before making any investments.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Disclaimer: The above content is non-editorial, and TIL hereby disclaims any and all warranties, expressed or implied, relating to it, and does not guarantee, vouch for or necessarily endorse any of the content.
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