Dissecting Gold ETFs; Investment Methods, Price Formation, Capital, Prospects and Risks

The Indonesia Stock Exchange (IDX) recently launched a gold exchange-traded fund (ETF) as an alternative gold investment in the capital market. The launch ends a long wait, given that plans to develop gold ETFs in Indonesia had been under discussion by the Financial Services Authority (OJK) and the IDX for at least 10 to 15 years. Through a gold ETF, investors no longer need to store gold bullion or buy digital gold to gain exposure to gold price movements. With a gold ETF, investors invest in a mutual fund that uses gold as the underlying asset and is managed in accordance with sharia principles.