If you have kept gold with a Mutual Fund, then this is important news for you

Mutual Fund: SEBI is considering changes in the valuation system of gold and silver ETFs held by mutual funds. Now, instead of LBMA, pricing can be done from the spot prices of the domestic commodity market. This will make the valuation process more transparent and linked to the local market. This step can be beneficial for investors. Especially for those who have invested in gold-silver ETFs. The last date for giving suggestions has been fixed as 6 August 2025.

Mutual Fund: The Securities and Exchange Board of India (SEBI) is considering changes in the valuation method of gold and silver held by mutual funds through exchange-traded funds (ETFs). Its purpose is to bring the existing system more in sync with local market prices.

What is the problem with the LBMA based system

In India, gold held under gold ETF schemes is valued in dollars per troy ounce based on the AM fixing price of the London Bullion Market Association (LBMA). This price is decided every morning with the consent of five global banks. Similarly, the silver ETF is also valued on the basis of LBMA's fixed AM pricing and 999.0 purity. But there are many complexities in this system. For example, dependence on foreign exchange rates, dollar to rupee conversion, custom duty and premium or discount adjustments and pricing unrelated to domestic demand and supply.

SEBI's proposal

SEBI has proposed in its consultation paper that now asset management companies (AMCs) should directly use the spot prices published by the domestic commodity markets instead of the LBMA price. This proposal will make the valuation process simple and transparent, the domestic demand and supply situation will be better reflected, dependence on foreign pricing will be reduced and valuation will be possible for investors as per local market reality.

Disparity in pricing ends

There is a difference in the valuation method of gold and silver. Gold and silver ETF will be based on LBMA. Apart from this, commodity derivatives (ETCD) will be based on the closing price of the domestic futures market. It is felt necessary to remove this inequality through standardization.

What will be the effect for investors?

If this proposal is implemented, mutual fund investors will get the benefit of more realistic valuation of gold and silver. NAVs matching domestic prices can be obtained and

There will be relief from complex foreign calculations in pricing. This change is especially important for those investors whose money is invested in gold and silver ETFs and who want long-term stability.

SEBI sought suggestions

SEBI has asked all stakeholders to give suggestions on this subject by 6 August 2025. Investors, AMCs, experts and institutions can send their opinion on this. This proposal of SEBI can prove to be a major corrective step for gold and silver investors. This will not only bring transparency in pricing, but will also make investment valuation possible in line with local economic realities. If implemented, it can further strengthen the confidence of ETF investment in India.

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