POSTED BY September 15, 2010 COMMENTS (235)ON
The traditional, age old ways of buying gold have been ways like gold ornaments from jewellers or coins, bars, biscuits from banks or jewellers. However, since the last few years, new ways of buying gold have emerged. These include buying gold in demat form (electronic), through gold futures, gold ETFs and the latest one is E-Gold. So what is this E-Gold? This article makes an attempt to throw some light on this new product.
What is E-Gold?
The National Spot Exchange Limited (NSEL) has introduced E-series products in commodities. To start with, they have launched E-Gold and E-Silver. Later on, they also plan to cover few other metals and also some agricultural commodities in the same series. Trading in E-Gold has been on since 17th March 2010. E-Gold units can be bought and sold through the exchange (NSEL) just like shares. Here one unit of e-gold is equal to 1 gram of gold. For long term goals like accumulating gold for children’s marriage, retail investors can buy e-gold in small quantities in their demat account over a period of time. Once their target is achieved, the individual can take physical delivery of gold through the exchange. By buying gold in electronic form (demat), the individual need not worry about the purity of gold, storage costs and the insurance of gold. If the individual has bought e-gold only for investment purpose and does not need to take delivery of physical gold, then he can always sell the e-gold units and encash them. How to invest for Child related Goals
Requirements for E-Gold
To buy E-Gold units, the individual needs to open a demat account (beneficiary account) with one of the impaneled Depository Participants (DP). The list of the impaneled DP’s is given on the NSEL website (or see the list below.) Retail individual can place buy and sell orders for e-gold units with their broker through phone or through the internet (broker’s website). Investing in E-Gold or other metals opens up one more asset class for retail individuals to diversify their investment portfolio. It provides a means to buy, accumulate and sell E-Gold as well as to convert the same into physical gold. To invest in E-Gold you need to have your Demat account at any of these places… India Infoline Ltd, Karvy Stock Broking Limited, Geojit BNP Paribas Financial Services ltd , Anand Rathi shares & stock brokers ltd and many more.[DDET Click Here to see the Full list of DP’s] Globe Capital Market Limited
If an individual wants to take physical delivery of his e-gold units then he / she can take it in multiples of 8 grams, 10 grams, 100 grams and 1 kg. To start with the exchange has delivery centres at Ahmedabad, Delhi and Mumbai. In due course of time the exchange plans to open more delivery centres in other cities. India for long has been the largest consumer of gold in the world as Indians love to buy gold. But since last few years because of the steep increase in the price of the yellow metal, it is getting further out of reach of the common man. By introducing the E-Series range of products, NSEL is focusing on the affordability factor by keeping one unit equivalent to 1 gram of gold which makes gold affordable once more, for the masses.
The Exchange shall levy the turnover charges of Rs. 20 per lakh of turnover to both buyer and seller member on monthly basis. This shall be applicable on all executed transactions. Storage charges shall be levied by the Exchange on monthly basis. Such charges will be computed based on the holding in the respective accounts on the last Saturday of every month. The charges per month per unit of E-GOLD will be 60 paise only. For conversion of e-gold into physical gold as per the current rates, VAT will be 1 % of the value of goods. In case physical delivery takes place in Mumbai, octroi @ 0.1 % of the value of delivery will also be applicable. Interested readers can read in detail in this circular
Though the product serves the purpose of common man of accumulating gold in small-small quantities over a period of time, not many people are aware of this product. To make it a success NSEL will have to create awareness about this product through various investor education channels, so that people realise the benefits of this product. How they go about doing this, remains to be seen.
This is Guest post by Gopal Gidwani , who writes on his blog BachatKhata.com . I have edited it with more information and added the chart .
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235 replies on this article “Invest in Gold and Silver through E-Gold and E-Silver”
I would like to purchase gold in physical for marraige purpose. Is there any best way to buy gold at low possible cost
From the jeweler?
I want to buy e gold for my daughter marriage down the line. So it is advisable to go for this route or any other. Advice
You can go with it !
Nice article! What is good forum to invest between gold and silver and what is effective to buy coins or bar?
I will go with bars
Thanks for the suggestion. 🙂
Can one buy e gold now , hold, Trade. ..how. About financing e gold purchase or finance against e gold ..can it be done now ..
No , its not open for purchase now
As NSEL trading is banned .What is best way to invest in GOLD/Silver now ?
You can go with gold mutual funds
I had invested in e-gold in mid2012 with Karvy as my broker. I understand that trading in eGold has been banned now with no idea if it would be made available again.
Can you please advise on how can I sell my eGold units and cash out?
Only your broker will be able to help you on that information .
Thanks for the info.
Would like to know if E Series gold trading enabled. not able to find any info on it.
This has been banned now .
Do we have any news on when/whether e-gold trading will be re-enabled?
No idea on that !
Hello, Do u advice to invest in gold now or not? please help me.
What exactly is your long term goal ?
Manish, My max time horizon is 2020 . Do we have an option in India to invest in Silver ETF without additional leverage and with 2X leverage(leverage only for a smaller time period investments?
Firstly, I wanted to invest monthly in Gold and Silver, So just wanted to know is there any ban on buying e-gold & e-silver. Secondly, Looking at the present condition what will be the best way of investment in gold and silver (ETF or Gold Fund).
P.S. -> I have IDBI’s Demat & Trading account.
The best thing you can do right now is to invest in monthly investments plans by jewelers , or buy gold funds !
Thanks Manish, I have checked with local renowned jewelers but they have maximum tenure of 1 year or 18 months where as i am looking for long term investment in disciplinary manner. So would you please suggest shall I go with ETF’s or Gold Mutual Fund, What is your view of Reliance Gold Mutual Fund.
Gold ETF is a good option, but why not take a 18 month thing and then renew ! .. Whats a big harm in that !
Had called Religare Securities to find out if they support trading of egold on NSEL. They informed the facility is suspended, as per SEBI. Googled up and found:
Yes, it recently happened after NSEL scam
The information given by you is really helpful. and one can invest in gold via DP.
1. is this any risk if DP is bankrupt or closed (this will rarely happens but possible)
2. if I will buy gold in MCX commodity market and rate of gold suddenly fall down and I do not want to book loss and convert that gold into physical format, is this any option to convert that gold?
1. If you look at NSEL problems right now, this is possible
2. Some exchanges give that option, but it can get complex .
Hi Manish and others,
could someone explain why the price of 1 gm of eGold is higher than the MCX price by around 1000 Rupees. Appreciate if someone can share the details.
No idea on that , and this should be discussed at length here https://www.jagoinvestor.com/forum/
how will you distinguish between ETF and Egold what are the advantage and dis advantages.
what do you recommend. I want to put 3-5K every month into this.
Already discussed here https://www.jagoinvestor.com/2011/06/gold-saving-funds-gold-etf.html
What is the comparatively best option Whether it is EFT gold or E-gold. Please advise. Also pls let me know chart of Tax & other charges
Both are different than each other, its only you who can decide which one fits you https://www.jagoinvestor.com/2012/06/best-way-to-invest-in-gold.html
As suggested by most, E-Gold is a better option to buy small quantities of physical gold.But delivery facilities only exit in Delhi, Mumbai, Ahmedabad. No centres for the east,like Kolkata. So not very convenient for the eastern people.
Also, after physical delivery of (I assume 99.99% purity gold),where to go for making jewellery (22 Carat).Why will a jeweler value the gold.There will be some loss.Please advise.
Thanks for your comment on this
This blog is very helpful and i have decided to invest and i have called Religare in Bangalore and one of thier rep will come next week as i am a fresher and new to this i will start with small investment. One doubt i have in this.
– If i buy small amount of maybe 2 gram gold or such small amount. Then i doubt anyone will be intrested in buying such small amount.
– If the prices are already high why would someone buy from me ?
Thanks in advance.
2gm per month is not a small amount 🙂
Also someone will buy from you , because he does not think like you 🙂
Today first time in life I went to purchase 1kg silver in PC jewllers and the cost they were quoting was 72,000 = 62,000(latest price) + 10,000(Making charges). Making charges are 10/- Rs per gram. I said “WOW” this is approx 16% extra charges on top of original price.
Finally I said to sales man “See the charges are unable to DIGEST, let me do some research first”.
Then I saw your article and this changed my thinking completely. I hope while purchasing E-Silver there would not be any making charges as well as storage charges 😉
Thanks a lot,
Yes . go for it !
Hi Manish, thanks a lot for the insight. Found useful .
Any Idea, out of all these listed DPs who holds the majority of NSE accounts? Thought that will help to open an account with them. Or do you recommend any DP / broker (Karvy / IFCI ) for opening the account ? Any one-time, annual, transaction charges involved
I would choose to open account basis the following factors:
Best service (offline and online )
Pls help with comments if any.
kindly advice me
What is your question ? Let us know
do u recommed any broker/DP like karvey/IFCI to buy egold.
No idea on that , try asking on our forum
If I will take physical delivery of e-Gold in 10 gm coin from NSEL, which purity of gold I will get 995 or 999? and will that be hallmarked or not?
That can be commented only by NSEL
After so much of analysis and discussions with family, we decided to invest in e-gold of NSEL.
I contacted Aditya birla for the investment in e-gold, as i already had a demat and trading account with them. When i contacted, the representative told me that the account i had is only for equity trading and i have to open another trading account for commodities.
Is that true?? or is he trying to reach his targets??
I browsed the website of NSEL http://www.nationalspotexchange.com but i couldn’t found any details of the same.
Yea .. its because the trading account you have deals only with stocks and other things which are listed on NSE/BSE . NSEL is a different exchange for commodities, just open another one .
i would like to invest a small amount in silver.. since i am a beginner i do not know which is the best way of investing in silver (ie physical silver or e silver).please explain the advantage and disadvantage on both mode of investment
This calls for a discussion, please start a thread here – http://www.jagoinvestor.com/forum/
hi manish….. sahara gold mart scheme is offering less value to book more amount of gold(37.5%discount) in a five year investment plan…is there any risk involved in it???
Which plan is it exactly ?
I am planning to purchase gold but I don’t want to hold it physically right at this moment. I have come to know about eGold using which we can buy gold in demat form and later when we wish we can get physical delivery of it. can you please clarify on below points?
1. How useful or efficient this is?
2. Can I get physical delivery at any time?
3. are there any charges incurred in physical delivery?
4. what is the expense of maintenance?
5. How safe these are?
1. This is new thing and not many people do this , why dont you buy Gold ETF
2. Yes, but there will be costs , enquire on their website
4. See website
5. They are safe
Your original article is dated Sept 2010. Not sure if ICICDirect offered Gold ETF and E-Gold options at that time.
I currently have a ICICIDirect demat account and there I can see GOLDEX etc which offers investing in GOLD ETF. Is there any option available as of today where I can invest in E-Gold through ICICIDirect ?
If I opt to invest in GOLDEX Gold ETF, is it possible to take a physical delivery in the form of Gold bars?
No , with ETF its not possible
Thanks for this post. Do Sharekhan offer E-Silver also?
No idea on that , please ask them
which broker offers online trading in e-gold ,
i have open a nsel a/c with sharekhan but the same is an offline a/c
No idea on this , use forum https://www.jagoinvestor.com/forum
please tell me,what is differece betveen ETF OR E_GOLD (in case of brokrese or holding log time)
ETF are traded in stock exchange , E-Gold is traded at NSEL
sir is it possible that if i buy gold fm state bank of india and if i sell the gold after one year to the same branch of state bank of india did i got the price of gold on that day current price as return please
Bank do not buy gold back .. you will have to sell it to jewellers !
yes from q150-q155
thank u sir,but plz clarify me, nobody is giving perfect information
Did you ask it on forum ?
iwnt to buy some huge amount of silver (some 50-70kg) physical form ,iheard that some instititions like hhec,stc,mmtc directly import silver from mcx or international market, what will be the price when compared to e silver and market price and what is the procedure to buy from these institutions,and more than that what will be the minumum and maximum amount we can buy from them
I think your question is best suited for our forum : jagoinvestor.com/forum
thanks for the information but in nsel website and some other sites the vat is only 1%,but brokers are telling 10% ,why is the difference
iwant to convert e silver in to physichal silver ,,so iwnt to know the total charges for this in detailed form like vat,transaction charges,brokarage charges etc ,,,,,,,when i contacted my broker (religare) they told me its 2500 rs for convertion ,10%vat and some other brokarage charges if u take these things and all to buy 1kg of silver it will cost some 10000rs extra to market price please clarify me
Yes .. if your broker has given that info , trust that info , it would be like that .. why dont you just sell it off online and then with the money buy the physical silver from market .
Why is there so much difference in the gold rate of 24 carat gold in jewellery shops and egold ? For e.g today the rate of 1gm gold in tanshiq store is 2878 but benchmark gold etf is 2609 .
There are 2 things ..
1. Tanishq can put any increase in their price and they are free to do it, you can take the decision if you want to buy it or not .
2. There can be changes in which market they are following , gold etf might be following the international prices , i am not sure on this .
This is a reply for the above 3-4 queries. Anybody can open a commodity trading a/c with the DPs who have registered with NSEL, for buying the e-series products. There is no restriction that the person should be a Govt. employee/not.
As for as the online purchase of e-series products are concerned, I have got a commodity trading a/c with IFIN(www.ifinltd.in), Chennai-34(Toll-free no: 1800-425-1117), who is offering online purchase/selling of e-series products, just like equities.
Enjoy trading. Thanks.
which broker have the online portal for trading in e-gold any idea? i have spot exchange a/c with sharekhan but sharekhan doesn’t offer online trading in e-gold?
any broker allows online trading in e-gold?
Those brokers names are mentioned in the article itself ? Did you look at it ?
Yeah broker’s name is their but i am not sure if anyone has n online portal for e-gold what everyone has is an offline portal wherein one should call the dial-n-trade number of the broker & purchase..
i wanna know any broker has an website where in i can place order on internet just like equity.I have an spot exchange a/c for e-gold with sharekhan but the trading is offline for e-gold with them
better ask on our forum in that case : http://www.jagoinvestor.com/forum
Manish can you clarify two doubts, if possible !?
(i) Can a Government employee open Demat(Commodities) in his name and invest in e-commodities?
(ii) Is Sales Tax number number required for selling/Trading e-gold/e-silver etc.?
My Question is when we buy this units in gold, how long can i keep it, eg i keep buying 2 units every month for a year, can i take deliver of it after a year or sell it?
You can buy it and keep it as much time as you want, taking the delivery of gold is just optional .
I have opened a commodity a/c with M/s.IFCI financial services ltd, chennai(http://www.ifinltd.in). I feel very comfortable for buying/selling of e-series products. Their charges are also relatively low compared to other DPs. Their AMC charge is Rs.200/- per year and brokerage is 0.35% of the total traded value of the e-series products. Physical delivery is also possible. You can buy online/by phone. Their toll-free no. is :1800-425-1117.
Thanks for that information
Thanks for all the information related to Gold.
I am planning to invest in E-Gold, When i contacted Karvy for opening a comodity trading account they explained me the charge like this :
Demat Account = 375
Broking account opening charge =250
Brokerage = 50 paisa on Rs 100/- (1 unit = 2800 brokerage =14/- )
Transaction Charge = Rs 20/-
So if i buy one unit it will be 14+20= 34/-
Is it worth opening account with Karvy ?
yes .. it will be 34 and even more because you also pay STT and Transaction charges to govt and stock exchange .. but its fine if you are buying large quantities .. try Sharekhan and also ICICIDirect
I wanted to know if delivery based buying is permitted for gold and silver in MCX as in the case of NSEL(E gold/ E silver), or only futures is permitted. If delivery(demat not physical) based buying is permitted then buying gold/silver from MCX is better as MCX is widely followed or else a separate account needs to be opened for NSEL for long term investing in gold/silver.
As like stocks , i dont think delivery based trading is there in gold/silver in india
Thanks for writing the Article.
It was very informative.
hi manish sir,
plz tell me that in e-series intra-day trading r allowed or not?
if not then plz tell me that after how many days, we would able to sell back and is there any other conditions r also associated with it?
Yes Intraday trading is allowed and possible.
If the transaction is not squared up during the day than you can sell only once the qty is transfered and available in your demat account, which can take anywhere between 3-5 days to reflect in your demat account as clear balance.
thank u sir,
plz tell me that who regulates NSEL?
generally FMC regulates all the commodity exchanges like MCX, NCDEX etc. but on FMC`s website there is not mentioning anything about NSEL exchange.
so i have in big trouble about NSEL`s future.
plz tell me that how NSEL is genuine? and if is really registered and regulated by FMC then plz provide me the link to check & confirm.
thnx in advance.
FMC only regulates NSEL http://in.reuters.com/article/2011/06/10/india-regulator-idINL3E7H91TO20110610
I am not aware of this . you might want to ask it on forum : http://www.jagoinvestor.com/forum/
give me your address nr. maninagar in ahmedabad.
give me your office address nr. maninagar about started e silver investment
hi manish sir,
today i am applying in KARVY to open demat & trading a/c to trade in commodities. i just want to invest my money in E-silver as it always attract me. i want to purchase 100 unites (10 kg) e-silver. but as i am new to these type of investment, afraid for having something wrong. please tell me:
(1). if it have any kind of risk?
(2). would i have to pay tax for this?
(3). if yes, then when & how taxes are calculated?
(4). any option to save or reduce tax?
(5). between e-gold & e-silver or any other e-series metals, which one is best for investment?
(6). would trading in future commodity in MCX for gold & silver is safe & profitable?
sorry manish sir…..my questions are long but each are very useful to me.
thnx a lot in advance 🙂
You need to learn a bit more before starting investing .. you are going too much with just names ..there can be comparision between e-gold and e-silver like this .. They are different .. And its not recommended to invest in something in such a big quantity .. Learn a bit more on these options
thnx manish sir… but please tell me what kind of risks NSEL/ KARVY have with e-series??
There is market risks , thats all .. just like equity investments
Images is missing in this page. Not able to see the difference between e-gold and gold ETF..
And also this link is broken https://www.jagoinvestor.com/2010/12/small-savings-creates-wealth.html
I changed the link url to something else, i will change it soon
That image is lost due to some hosting issue .. apologies
Pl inform me how to invest in egold and buy from DP
How ? Just open a demat account and start buying from their online portal . What exactly you need from the answer ?
This seems like a real con. I give you the money and you tell me you buy the gold at fixed price. Over last 6 months how much have you lost or just not giving the gold when clients want it. Come on wheres your books. It is a pyramid scheme.
What is a pyramid scheme ? What are you reffering to ?
I just herd On Zee Business about e Gold. Till Now i have been investing in Gold ETFs. I require Gold in Physical form for my daughter marraige. As per your article, it suggest me to switch over to e Gold. I eed following querries to be ansered (1) I would require this physical gold after 4-5 years and i start purchaing 1 unit of E Gold . Can i retain the Gold till that time. (2) suppose my cost prce is 2200 and after 5 years it touches 10000. Would i be given my share of purchases at the rate of 2000 or at the rate of 10000
It is nice to know that you have realised that E-Gold / e-Silver is better product than Gold ETF.
Yes if you buy 1 gram of e-Gold every month, than at the end of your buying period you would have accumulate GOLD in DEMAT form. When ever you want Gold for your daughter’s marriage, you can just exchange your eGold in Demat to PHYSICAL GOLD at anytime.
Please note that here your holding is in Grams you have accumulated over the period. This is much more transparent than Gold ETF or any other way of investing where you loose money in buying/selling. If you buy now at Rs: 2200/- and at that time the price is Rs: 10,000 even, it does not matter. What you get is the grams you have accumulated, whatever be the price than.
eGold & eSilver from NSEL in Demat form is the most convenient way of
buying, holding, accumulating, & selling Gold and Silver, without any buying or selling losses
Informative article. Thanks for educating people like us.
I’ve a question –
Amongst the DPs mentioned by you, which one is good from security point of view.
How can a demat account be opened if you are an NRI.
I am not very sure of that .. i have not opened an account with any personally . ask it on forum ; https://www.jagoinvestor.com/forum/
I am new to share market and want to open a demat account to trade in shares and commodities, e-gold, e-silver. Kindly suggest me a good dp which has lowest charges and good services.
There is no one DP which will suit every condition , good DP’s come with cost . I personally like ICICI as I find it simple and UI is good , but I have not tried any other , I would also recommend sharekhan which is also known a lot for its simplicity .
Thanks for your reply,but so far as I know ICICI does not deals in commodities,gold and silver. Is there any other DP other than sharekhan which you would like to recommend which has reasonable charges and is really helpful for newcomers like me.
I think they do commodities and Gold through ETF , but not silver , I am not sure if they are with NSEL , so if you wanted to buy other commodities , you cant do with ICICI
Invest in Gold and silver in demat form (E-Gold, E-Silver):: email@example.com
Last week i have applied for demay accnt in Kotak Securiets
i am looking for saving in to ETF Silver only for my children’s future….. m searching from last week, but not able to find ETF silver where should i Buy ETF SIlver for long time, but i found that every where it is limited to 90days only.
So please advice where should i buy ETF silver with 20years saving
The first point is there is no “Silver ETF” in india, may be you are talking about e-Silver from NSEL for which Kotak might be a broker . Correct ?
Why dont you buy physical silver bars !
Thanks for the article. After going through the doc I found it is interesting and helps me in intellectual investment. Can you please clear my below queries;
1. I want to choose Geojit comtrade or Karvy Comtrade for E-Silver trading. Can you suggest me best among these two in view of security.
Please also put your personal email id to directly contact with you.
Thanks and Regards,
You can choose any of those , they should be equity from security point .
You can contact me through this page : https://www.jagoinvestor.com/contact
Thanks for infrmation.I want to invest in Silver through SIP,So have any system by which I can invest money in Silver?Please suggest me.
You can invest in e-silver , but I dont think they have any SIP facility
Though there is no SIP facility, but what can be done is you either invest every fixed date eSilver or eGold of approximate value of SIP you have in mind. Since eGold or eSilver can not be bought of fractional unit you need to buy in single or multiple units. I would treat it as better option since as time passes you may have higher amount to imvest per month. Thus say in 60 months you buy say one unit per month amounting to 60 units of eGold or eSilver balanc to your account. The cost may be say lesser value per unit to higher value per unit average cost would be (x+xy)*30 divided by say 60. Where as the value at the end of period would be xy*60. Which I am sure would be much higher than (x+xy)*30. and equally you have option to continue the investment to your sweet will.
We are register Trading Member of NATIONAL SPOT EXCHANGE LTD. Any investor interested in Buy/Selling/Trading in E-Gold / E-Silver can contact us. It does not matter in which part of India you live till you can communicate. You can contact us by Telephone, Email, twitter, Skype, Gtalk – Just any way you want.
We will guide you and also assist you in your investment in Gold & Silver. You can contact and write to us at firstname.lastname@example.org.
You can visit us at: https://profiles.google.com/buyeGoldeSilver. You can also tweet and follow us at http://twitter.com/BUYeGOLDeSILVER for more information.
Awaiting to hear from you soon
How do we tax profit on delivery based commodity transactions?
For gold , its liek this
– before 3 yrs , profit is added to salary
– After 3 yrs , Indexation applies with 20% tax
This is directly from Anjani Sinha
A correction about tax treatment
e-gold should be held for more than 36 months for confessional tax treatment for to long term capital gains
You will also have to pay wealth tax if the total value of your taxable wealth together with market value of e-gold exceeds Rs30 lakh.
I will make the change .
Which is the best platform for buying E-series products of NSEL?
Can anybody kindly inform me which is the simple, best and user-friendly platform for buying/selling of e-series products(e-gold, e-silver, e-copper & e-zinc) of NSEL? What are the brokerage charges for buying/selling of these e-series products?
Its tough to get this info from here as none of the people here have much experience, better ask it at https://www.jagoinvestor.com/forum/
Pl try the google.co.in search engine with ‘e-gold Depositories in India’ search you will get answer, wellknown depository otherwise is ILFS if it suits you. Another suitable way would be on ILFS site lookout for brokers list who deal in egold and esilver units, one suitable to you for trade will guide you for DP he is actively interacting, that would be better way to go for it.
What is Indexation benefits. Pls explain
I have trading account at Geojit. But not had commadity trading and demat account So, can I trade in e gold from this account? Now a days m trading only in shares.
I am not sure if you have to enable the e-gold trading also or is it automatically there ? do you see any seperate option on their website ?
you need to open separate Comtrade account with Geojit Contrade.
Account opening costs Rs 225/-.But there is no online facility for NSEL trading,since NSEL is new exchange.
It is only through phone as I was told by Comtrade staff.
Do I need to have commodity account for buying an E-Gold? I have an demat account for equity and can’t find a way to buy E-Gold.
No you dont need to have commodity account ,you need demat account only, however you should have demat account with one of the approved DP’s only , regular one’s like ICICI , Sharekhan etc are not on the list at the moment
Good informative article.
Which is good online broker/platform for NSEL Gold/Silver E-series out of empaneled brokers? .
Manish, I called up the Karvy and they are clueless on this Egold and ESilver. They dont even know what this means 🙂
It might be the case , it takes time for lower level employees to know and understand the products
Where can i get the latest list of approved DP’s. By the way i have an demat account with India Info line, does this come under approved DP’s list.
If I go for a GOLD ETF, I can buy units for a fixed budget say 2000 via SIP. However, I think we cannot set a SIP in case of eGOLD. Everytime, I may need to check what is the amount I need to purchase 1 gram of gold and then put a request to buy. Is my understanding correct? It may be bit inconvenient at times in that case.
Also, I am bit confused as how does taxability works in case of GOLD ETF and eGOLD.
Yes your point is correct . from taxability , the short term gain is before 1 yr and in that case the profits are added to your income and taxed at applicable rates and if its more than a year , then indexation benefits are available .
I am asking these things because all these are very new to me…Hence, please bear my ignorance. Just to re-confirm my understanding:
GOLD ETF: If sold within 1 year, then taxable + Exit Load
If sold later, No tax
eGOLD: If sold within 1 year, then taxable
If sold later, then taxable after indexation
One small suggestion: Whenever I click any hyperlink on any of the articles, the new page opens within the same web-browser. Is it possible to change the settings so that whenever I click any hyperlink then the page is opened in a new browser.
No , the taxability for both gold-etf and e-gold is same , which is If sold within 1 year, then taxable , If sold later, then taxable after indexation
regarding click on the article , its not a general settings ,there are set while writing the article , if you can open the articles in new browser by right-clicking and then choosing “Open in new broswer or tab” .
Well guys better buy it from a jeweler. Vert simple advantage SAVE TAX. SAVE COST OF 12%
How to save tax ? How to save cost of 12%
Frankly people have only one mind set i.e. for buying of Gold as investment. In case of physical investment Gold or silver is OK, but if we think of e purchase of a metal, I think rather than gold or silver metals like Copper or Aluminium or similar industrially used metals can make sense for investments. The physical delivery any way is not the issue.
Would like someone to comment.
I agree , we have to get above GOLD and SILVER and look at other metals now if we are looking from pure investment purpose . Rather than utilizing the technological advantage , we are still stuck in old things
Since each unit in most of the Gold ETF is supposed to be equivalent to `cost` of about 1 gm of gold then why the difference in price of different ETFs. I see:
Kotak Gold ETF: 1880
SBI Gold ETF: 1920:99
HDFC Gold ETF: 1924.70
Good question . There are two reasons for this .
1) Expense ratio : The fund takes some charges and hence more the charge more the variation
2) Liquidity : The more the liquidity , the lesser the spread in price , so if there is some ETF with very less liquidity , someone wants to sell at 1900 and other wants to buy at 1950 , and with one transaction which happened at 1950 ,the price is set to 1950 , where as in a fund with higher liquidity , if some one wants to buy at 1900 , we will get people ready to sell at 1901 or 1902 . Hence the differecen , did you get it ?
Dear Manish Ji,
Thanx to provide very informative article on ur blog. I am really very big fan of u.
Dear Sir, I want to update you that from the Letter No. NSEL/CNS/2010/113 Dated 2.08.2010 the storing charges of gold in NSEL has been removed. so Please update this article so reader will get more benefit from E-Gold Scheme of NSEL (
Great . I will update that . Thanks for the contribution . Anyways this message you have put in the comments sections , so even people can read it here 🙂
Yes, I also read that in NSEL website. now, I think e-gold is a better investment than gold etf’s at least in terms of expense ratio.
Yes in terms of expense ratio, its better!
It would be really great if you can change your original blog and update the same about the Storage charges removal.
I believe that most of the readres do not read the comments, they are only interested in blog content and their own queries.
At last, this is really good article. Now I have changed my mind to go for E-Gold.
Thats what we want to change .. blog comments has extra info and some one looking for it should go through it 🙂
Great article. Gold is always been a great hedging type of investment. Many of Indians are still buying Gold in Jewellary form which requires lot of security issues like whether Gold is pure or not, storing of Gold Jewellaries etc. Apart from the above like Gold ETFs I have come across Aditya Birla Gold Harvest Scheme which offers buying 100Gms of Gold bars at an interest free installments. I am giving here the link for more details.
Can you give more info , this much data is not enough for analysis , I didnt understand the plan with the data given there .
By reading your article on egold, i contacted to one of the branch of aditya birla money and they have email me “gold harvest” scheme instead of e gold scheme i think they are unaware about this product. kindly find the details which they have mailed me as below:
Gold Harvest Scheme
Buy 100 gms of Gold by paying Rs.25,000
Pay the rest in easy installments
Delivery at the end of the payment period
No interest on installments
Gold price is fixed in the beginning. So no worries on volatility
Receive 995/999 purity certified gold
Pay Rs.25,000 instead of full value * Only pay 2% upfront * Receive 995/999 pure gold * Choice of period of installments * Sell back anytime at full value *
Thanks for the article on e gold /silver. Found it very timely as i was wanting to find a way to invest in silver . Most of the readers are talking about gold whereas it is silver which is actually doing better.Would love to hear the experience of an investor who has an NSEL account and has invested in silver. I read information on the NSEL site regarding silver but found it a bit confusing. Could you throw some more light on it?
Good to see that some one is also talking about silver 🙂 . I am not sure if you can find some one very easily , because its relatively new 🙂 . But when you invest through it , dont forget to update others here 🙂
I remember reading one of your blog articles where you had said that day trading and short-term investing (including futures, options & derivatives trading) is something that interests you.
Maybe you could write articles on these topics, particularly about how one should go about understanding and doing such trades. I’m sure everyone would like to know how to make an extra income in the short-term especially considering that most needs in our lives come in the short-term (i.e. the short term after which you realize it as a need) :).
Complete newbies like me in short-term investing, day trading, F&O, and derivatives would really benefit from these articles.
It is a topic of my linking , however my concentration is on personal finance at the moment, You can read these topics offline from other sources, its mainly your interest which is help you in learning not the sources from where you read it. You can ask your doubts from me incase you need any .
Thanks. I was planning on looking up resources on that but I thought your articles on that would help too. If you do plan to write in the future, I would be happy.
Ram you can read some 2-3 articles which I have written till now (search on the top right or or look at https://www.jagoinvestor.com/archives) . You will get some idea
Thanks, Manish. Will take a look.
Somewhere i read that short term trading is such a field that it’s designed for the 90% of average traders to fail. If you think you can put the time and effort in being in that exclusive 10% niche then only it’s worth it.
Hope better sense prevails 🙂
Absolutely. I am personally too aware of what I’ve heard and read on all these topics.
However, I’ve never ruled out anything at all till date without a full understanding of what it is. If I gain a full understanding of something and then make an informed decision, I feel that’s a decision well taken.
This is the right kind of investment which i was looking for. Now i can store the gold for my future responsibilities. Please keep update us if any new changes happen in this.
Sure , Are you not comfortable with Gold ETF’s ?
As per your article investment in e gold is better than gold etf, and i am agree with your article because in gold etf we cannot claim for physical gold whereas in e gold we can take physical gold through that i can make any ornaments for my family isn’t it correct.
Yes you are correct , however there is one small point, if you have gold ETF. you can always sell it , get cash and buy gold from market . So in a way they are same .
if we sell ETFs to buy jewellery, there will be tax incidence whereas if we exchange physical gold for jewellery there should not be any tax incidence. am i right?
Yes .. selling ETF means “selling” .. if you take physical gold to jeweler and just ask him to give you some modified thing ,then there is no tax
I don’t think so. There must be some catch here. otherwise, effectively user is not paying any tax for the gains.
If I look at the table of comparison. I just see 2 major differences between the NSEL and Gold ETF (giving less importance to delivery locations for the time being)
1) Prices linked to and 2) Expense Ratio.
I was expecting you to give us little more detailed information on the first point. i.e., how the price being linked to Indian gold prices or International prices can potentially make a difference to an Indian Investor. Like say today what’s the cost of one unit of ETF Vs one unit of NSEL and how are they likely to move in scenarios of ruppee appreciation Vs depreciation Vs international gold price movements.
On the point of expense ration, I found out from Benchmark mutual fund site that the mandated expense ration for gold ETF i.e., ‘Gold BeES’ is 1%. But i remember reading somewhere the actuals are well below 0.75%. So, when you are saying it’s 2.5-4% for ETF. Am I missing some point here ?
Also i see that your calculation 0.4% (actual cost charged by NSEL is fixed in Rupees) is based more or less on the current cost of gold. But am afraid there is no long term committment from NSEL to keep the costs at the same level unlike ETF’s. It can move irrespective of the movement of gold prices. You get what am saying, right ?? Tomorrow if the gold prices move down and their costs go up(or even remain same) then the ratio may become unfavorable, isn’t it ??
I have same question what Raja has about expense ratio.
In valueresearchonline.com they are saying 0.75% but in Benchmark fund website they are charging 1% but here in your table it is 2.5% above.
it is really confusing. and somewhere in your article you also said, Gold ETF’s cost below 1%. which one is correct
The data in the table has been taken from NSEL source . As far as I knew the expense ratio was around 1% only .
I think there is slight confusion that you have here. There is something called mandated expense which means the fund can at max spend this %age amount for managing the fund. But better funds try to manage the expense at lower than the mandated limit and that actual expense in case of benchmark Gold ETF is 0.75% .
The NAV’s you see has already taken this expense calculation into account and we are not charged this separately.
I think the NSEL guys are wrong here in telling the expense as 2.5-4% foe ETF.
Secondly i didn’t get too much detail on how they intend to store the high volume of gold. Not very satisfied with what i read about it in the document. Seems like even traders can deposit gold with them and get NSEL units and then sell them electronically.
I remember reading that Gold ETF’s (mutual funds) have elaborate and stringent procedure of buying and storing it.
So, overall i think my money will go for ETF’s than NSEL (i.e., if i ever buy additional gold for investment).
Hope this helps.
When I inquired with Geojit,Rs 25 of brokerage for buying a unit(1 Gram) of E Gold from NSEL, I think, same charges for selling also.It gives around 2.5% of 1 gram gold(with Rs 2000).
It looks to be expensive than Gold ETFs,
what do you say?
2.5% total for buying and selling seems to be very high compared to etf’s . Is it same for other brokers as well ?
Very informative article – your post came just in time while I was debating with my wife over investing in ETF vs. purchasing gold from jewelers. But she was not very convinced with the idea of paper gold (as she likes to purchase gold from TBZ). With the additional info from your article – I guess she will now be convinced and so Thank you!!!!!!!!!
My question to you:
I plan to invest (E-Gold) around 10K per month (~5 grams) for 10-15yrs – mainly for my kids (at present I’ve none) or money for retirement (on top of PF, PPF, superannuation etc). Is there any investment risks involved here?? How much return can I expect for this time frame?
Appreciate your inputs.
Gold is known to give returns around inflation or sometimes even less . So over very long term, you should not expect more than 7-8% .
Sir, one advantage with buying liquid Gold from shop in coins etc is it can always be pledged when needed. – What will happen for this paper Gold ?/ whether this can also be pledged /? for emergency ?? Secondly please some body calculate — for ETF / e Gold the cost of keeping ?? ie WHAT IS THE COST OF KEEPING / ie – we have to deduct the amount earned form the cost of keeping. Assuming the average of Gold investment return is ~ 8 % – if we deduct the cost of keeping / taxes etrc — what will be the balance left out ????
Even your Gold in paper format can be pledged, but it would not be so easy as physical gold .
Good informative article! Thanks ….
I have a question. Lets say I buy e-Gold every month 1 gm for 16 months (just for convinence). Now the price of gold fluctuates and I expect the same to happen in e-Gold as well. Just like doing SIP in MF, I’m buying gold every month. End of 16 months, I would have averaged out the latest price. Say I started with 1825/gm and after 16 months its somewhere 2050/gm. Now the total value I spent was somewhere around 28K~30K. But when I sell it will always be at the latest price of ~32K (2050*16). Now thats a loss for the Exchange right? That too when you are committing to place physical gold it means the leverage doesn’t happen. At least in ETF its paper money, here I believe something is wrong.
No , in ETF’s also its not money paper, the equal amount of gold is bought and kept with custodians . same thing with e-Gold, the gold is bought in case of e-gold and kept. its just a service which is given to you , and you are charged for management, storage etc
Just assume I personally say to 100 people in my area that I will buy gold and keep it on their behalf , so people pay me for 10 gm , 100 gm , 50 gm .. I collect all the money and buy REAL gold and keep it . Suppose I have 10 KG of gold worth 2 crores and now I charge each one of them 1% , so I make 2 lacs in a year . What ever profits or loss happens on GOLD is of investors , as we have physical gold now , so mine is pure % share of the wealth managed , the same way E-Gold works (from what i understood) .
Its a kind of mutual funds 🙂 which buys gold and not shares .
Nice to know about a new way to buy gold. Not sure if I will invest in an etf. Have to pay taxes, have to pay demact acc charges; shubra and Heamant say returns not really high. Diversified equity fund seems better option to me.
In any case its about accumulating money and at some point if you do want buy real gold the impurity risk will always exist!
Agreed, diversified equity mutual funds will give you more returns. But remember, never put all your eggs in one basket. Diversify your portfolio. If not more, you should put atleast 10-15% of your portfolio in Gold. If you sell gold units after 1 year, it’s tax free.
Why do you think thats its tax free after 1 yrs, its incorrect , after 1 yrs it would be taxable with Indexation benefits .
Which is why I want to stay away from ETFs. The tax adjusted and inflation adjusted return is low. Diversification need not include gold. There are enough avenues to spread your risk which are tax free. with decent enough returns.
Yes you are correct over long term , however in short run in past few years , it has turned out to be an attractive investments post tax also , but as we cant predict it , its more of gambling than investment in short term
Thanks for publishing the article and adding the chart. The chart clearly points out the major differences between e-gold and Gold ETFs in terms of charges, delivery centres and the timings. The National Spot Exchange Trading hours are from morning 10:00 am to 11.30 pm evening. So its convenient even for office going people as they can buy and sell units of this product even after office hours. Also apart from e-gold, the National Spot Exchange has also introduced e-silver which I feel is the only product available for trading / investment in India for the retail investor after silver futures on the commodity exchanges. But trading in futures can be quite risky for retail investors. But e-silver is much safer for retail investors.
Great. but still people have doubts on how to invest , the procedure , can their demat account help ?
Thanks Manish for this nice article, I was looking to buy this EGOLD, but I cannot see this option either in my ICICIDIRECT or SHAREKHAN site. Can you please guide me, is it the same way we used to buy SBIGETS or some mutual fund or the process of buying EGOLD is different.
We need to buy from nsel and as mentioned the dps only sell those.
I see an option in angel for nsel spot in their trade demo account.
Within next 15-20 days ill be opening a demat account with angel.
But i dont see them as dp over here so i am confused.
Same about geojit paribas on its site i doesnt see any option to trade in this but it is mentioned as dp.
Here is the full list of DP :
you can log on to http://www.geojitcomtrade.com for E-GOLD RELATED matter
I think one should have demat account first before loggin in ?
for trading in egold one should open a trading + demat a/c exclusively for commodity.
Thanks manish for the article.
As i messaged earlier i was looking for same.
Now i want to know here is amc charges of 2.5-4% on gold etf.Is that on return or on investment.
2nd regarding e gold silver.DO i have to open new demat accounts?Or my bank demat trading account will suffice?
2.5-4% charges are mentioned in NSEL website, however as far as i know Gold ETF have charges around 1% , which is on investment , not on profits.
You might have to open the demat account deperatly for this, or your current demat account is not on the list of approved brokerage houses for selling E-Gold or E-silver .
what about tax if i don’t opt for physical delivery and sell it off after a few years?
on that note, please also enlighten how taxes on profits affect various investment avenues- specifically gold, property and long term mfs and a comparison across these options as to which is better tax-wise.
If you sell it electronically , then as per the current rules you will have to pay as per your holding period, if its less than a year then it will be added to your salary (profits) , and if you sell it after an year than 20% after indexation benefit.
But in DTC which will come in 2012 , those things will change .
Thanks for providing valuable articles on financial planning. I would like to know the difference between E-gold and gold ETFs? Whether they are same or not?
Its there in the article itself , what part confused you ?
Gold ETF’s are traded in stock exchange just like shares , so its prices are going up and down because people are buying and selling to each other. Where as E-GOLD is a product sold to you by the NSEL and not some one else like you . Its not Traded , also you can get GOLD physical delivery in case of E-GOLD , however with Gold ETF its not guaranteed , only some 1-2 AMC offer that option .
You can see other differences in the chart .
Your reply above had this sentence:
“You can see other differences in the chart .”
Where is the chart? Can u repost? or mail to me?
Guess I confused this article with other !
Nice article. But from a customer point of view, does it makes any difference if I buy gold units of ETF in my demat account instead of e-gold. Let’s assume I don’t want physical deliveries of Gold. My purpose is just investment.
You can see the difference in the table and see if it makes any difference , on a bigger note, it does not make much difference
Are there any leverage risks in E-gold, like gold ETF?
Do we have any leverage risk in Gold ETF ? I dont think so ? Why do u feel like that ,you pay Rs X to hold Rs X worth of thing , leverage happens when you pay less money to hold something of more value .
Did you get that ?
The banks that sell ETF buy it from a holding authority (in this case, another bank). Now, the holding authority can buy less gold than it was paid to, and yet be able to meet liquidation demands on daily basis. However, in a crisis, the demand may increase manifold, and hence the risk.
Are you saying that it happens in Indian gold ETF market , so if people are paying Rs 100 , the company;s are buying just 20 or 30 ? Is it so ?
I dont think so , because if that was the case , one should have experienced it at some point of time ,but i have never heard of it, however i am not sure , do you have some links on this ?
What he says is correct. PL note – Banks LIQUIDITY RATIO. To day it ~ 14 . This means banks have to keep only Rs14 per every 100 Rs of customers deposit. Rest is all given as loan or what ever – . Tecnically They have to kep only a small amount – This is under the premise – taht all the deposit holders – viz – like savings / fixed depoist holders etc will NOT with draw their money at atime. But – hypothetically if this happens banks will be in trouble. So there is a potential risk . Neverthless as some bbody pointed out – when they charge you for buying – why they charge to keep our money ? mIn fact they can leverage these – as a liquid – pledge – & get money from some other bank – country . You have to be carefull with Private banks. Besides there is NO CLARITY THAT THESE ARE INSURED ??? ie our bonds are they insured?/ If these are Not there it is better to buy from shop & keep it with us. That is more safe.
Your discussion forced me to check if my recommendations to my clients is still valid that they should buy Gold ETFs. What if the ETF is not holding Gold it goes bust !
I did a quick check of one sample ETF company – Reliance Gold ETF. I checked their audited balance sheet on AMFI’s website. As of 31 March 2011, the AMC’s balance sheet showed total value of its assets as 86,856 lacs rupees. 99.92% of the assets are held in 99.5% pure gold. This was divided into 4134 kilogram of gold bars. I think after this quick check it gives me comfort that ETFs are holding gold as their assets and no other derivatives / fancy products.
Even the SID of the fund mentions that the ETF can invest into gold or any other product authorised by SEBI. SEBI has not authorised Gold ETFs to invest into any other product except Gold.
Thanks for checking that updating us 🙂
hi manish ,am working in kuwait,(NRI)can invest in e gold……
Mostly yes 1
As per Religare site on e -Gold, NRI cannot open a demat a/c for NSEL e-gold, can you confirm
If their site says so , it should be final 🙂 . Thats an addition to my knowledge !
Hi Manish / Ashutosh,
It may all depend on how the gold custodian works (custodian which backs the ETF) – if there is a chain of sub-custodians leasing out their gold to each other, then it may be difficult to tell how much of it is actually there, specially when financial products can be packaged in ways which make it difficult for most people to even understand them 🙂 (Got this from another blog post: http://blogs.forbes.com/greatspeculations/2010/07/23/gold-etfs-and-the-manipulation-game/ – again, this might be true for more mature gold markets, and it may or may not apply for Indian Gold ETF as yet unless the ETF AMC uses an international custodian).
Got the above link from http://www.subramoney.com/2010/07/gold-etf-and-gold-mutual-funds-must-you-invest/
Thanks Bikram & Manish,
I like the concept of ETF as an investment tool. Only if the operations of this instrument were more transparent, investors could estimate the risks associated and hence balance their portfolios…
Wait for some time , there will be more information on this .
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