Descriptive Analytics during Disruptive Periods of Investments– A Case Study on Gold & Gold ETFs

Abstract

Gold ETF, which has been introduced in 2007, in the Indian market as an alternative to investment in physical gold witnessed a heavy outflow of investment during the period 2017-18; whereas, investment in Gold has increased. This research aims to find out the reason for this phenomenon and to create investment analytics between Gold and Gold ETF. We apply K-means of clustering for identifying the bullish/bearish trend in returns and ROC analysis to diagnose the goodness of predictability. The investment analytics is based on short-term gains during the sporadic trends.We found that the decrease in Gold ETF investments is due to less intra-day returns in Gold ETF as compared with Gold .We conclude that the returns from Gold ETF and physical Gold will have an equilibrium effect during the bullish period only. The bearish trend in Gold ETF may be hedged through Gold but not vice-versa.The reason for the negative effect has been portrayed in the ROC curve. During bearish trend, the mutual fund organisations of Gold ETFs are unable to market the product; where as in case of physical Gold, investors are not having negative perception. However, during bullish trend, the investment in both physical Gold and Gold ETFs are yielding same returns. This research enables the mutual fund managers to decide the investment analytics among Gold ETFs.