Demat for only Gold

POSTED BY SIVA PRASAD RAVIRALA ON April 15, 2012 7:24 am COMMENTS (5)

Dear All,
Is it wise to open Demat only for investing in Gold ETF?
Iam not interested in shares and Iam investing in Mutual Funds.
I belive 10% of my portfolio should be in Gold. Can I start in current market conditions?
Please advise.
R Siva Prasad

5 replies on this article “Demat for only Gold”

  1. Dear Ravi, E- Gold stands for Electronic Gold purchased @ National Spot Exchange Ltd. aka NSEL. It’s a commodity exchange & you can purchase gold here in demat form. Please check the below link –

    http://www.nationalspotexchange.com/Sitepages/Products.aspx?pg=Gold.htm&menuid=20&s=100

    The Gold saving (ultimately your money ‘ll be invested into Gold ETFs) funds are in a tricky spot. They do provide the usual benefit of MFs like SIP/STP/SWP but as the underlying asset is Gold & there ‘ll be double FMC (one from Gold ETF & another from Gold saving fund itself), your actual return ‘ll be lower than the physical Gold return.

    Thanks

    Ashal

  2. Dear Ashal,

    Thanks for your advise. Still I have following doubts.
    1. What is E-Gold? Can u please explain in brief?
    2. Iam investing in Mutual Funds without opening Demat A/c with Funds India.Com. My Doubt is , is it wise or economical or cost effective to open Demat only for the purpose of investing in Gold ETF when compared to other options especially Gold MFs?

    Thank You Very much.

    R Siva Prasad

    1. BanyanFA says:

      Hi Siva,
      I faced many queries in the same line as yours and hence I wrote this detailed article on all options currently available in India for investing into Gold including its pros & cons. Check out http://insight.banyanfa.com/?p=540.

      You may then notice that the options which you have currently for investing into Gold are Physical Gold, e-Gold, Gold ETF, Gold Mutual Funds investing into Gold ETFs and finally Gold Funds investing into shares Gold manufacturing companies.

      You may even want to consider Gold Mutual Funds which invest into Gold ETF as they would completely do away your requirements of having Demat account, specially if you want to open a Demat account just for your ETFs.

      Regards
      BFA

  3. Dear Siva, to open in Gold ETF or not is a personal call. Yes to invest in Gold ETF, you do require a Demat account. Regarding Gold investing you have 3 options of holding.

    1. Physical or traditional – In the form of Jewelry, coins, bars
    2. Gold Mutual funds (Gold ETF as well as Gold saving funds & Gold hybrid funds)
    3. E- Gold

    Please opt which is better suited for your needs.

    You may invest in Gold saving funds or Gold hybrid funds for the Gold exposure of your portfolio to keep things in the way as you are investing now.

    Thanks

    Ashal

  4. bharat shah says:

    better go for e-gold instead of gold etf , if you are starting for gold investment..you like the following at subramoney.com for detailed discussion. however , i think, you can invest in etf gold fund by opening a normal trading account with demate account with any broker and prefer only delivery base trading.
    http://www.subramoney.com/2012/03/gold-is-illiquid-2/

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