Difference between e-gold and gold etf

POSTED BY kramasundar ON December 18, 2012 1:55 am COMMENTS (5)

Hi

I came across an article about e-gold.

http://economictimes.indiatimes.com/personal-finance/savings-centre/analysis/how-investors-can-invest-in-e-gold/articleshow/17624309.cms

 

Can anyone pls tell what the difference betwen e-gold and gold etf.

 

Thanks

Ramsundar

5 replies on this article “Difference between e-gold and gold etf”

  1. bharat shah says:

    @ bemoneyaware
    ‘Gold ETFs are sold in units representing 1 gram of gold’
    if it is so, how do AMC expenses come from?

  2. BanyanFA says:

    http://localhost/jagoforum2/gold-etf-or-gold-fund/5459/ is a place where you would find good discussion around this topic.

  3. kramasundar says:

    thanks for ur input guys.

    Ramsundar

  4. bemoneyaware says:

    Gold Exchange Traded Funds (ETF) are open-ended mutual fund schemes that invest in standard gold bullion of 0.995 purity. Gold ETFs are sold in units representing 1 gram of gold and are listed on the stock exchanges, where they are traded. These are passively managed funds, Net Asset Value (NAV) of the gold ETF changes according to the variation in gold prices. These are designed to provide returns that would closely track the returns from physical gold.
    E-Gold: It is offered by the National Spot Exchange Limited (NSEL). NSEL It is national level, institutionalized, electronic, transparent spot market providing facilities for risk free and hassle free purchase and sell of various commodities across the country. It also provides an opportunity for small investors to invest in gold (also silver) in smaller denominations of 1 gram and multiple in demat form. It is similar in functionality to the cash segment in equities.
    These units are traded on the NSEL exchange from 10 am till 11.30 pm on weekdays. The demat account is different from the demat account used for stocks/equities. One needs to set up a trading account with an authorised participant with NSEL such as Globe, Religare, Karvy, Goldmine, IL&FS, SMC, Geojit BNP Paribas, India Infoline, Aditya Birla etc. These are similar to gold ETFs in that each unit of e-gold is equivalent to 1 gram of physical gold and the e-gold units are fully backed by an equivalent quantity of gold kept with the custodian.E-gold units can be converted to physical gold, called as rematerialisation, which involves remat charges ( 200 per 10 gram of gold) and VAT
    Our article Ways to invest in Gold covers it and other ways in detail.

  5. Sanchit Arora says:

    The main differences are:
    1) Physical Delivery: Unlike ETFs where it provides appreciation over the value of gold,E-gold lets you take the physical delivery of the units if needed.

    2) Tax Treatment:
    E-gold units are subject to Long Term Capital Gains if held for a period of at least 3 years whereas for Gold ETFs the period is 1 year.

    3)Separate Demat Acc:
    Investing in E-gold requires a separate demat account to be opened with National Spot Exchange Limited (NSEL)

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