E-Gold is an amazing form of investment. You can buy gold in electronic form, and no physical trade happen in E-gold investment.
National Spot Exchange Limited (NSEL) first time launched e-gold trading in the Indian commodities market in the year 2010.
However, as electronic-gold, there is another gold investment available in the market, such as the gold exchange-traded funds (gold ETFs) and Sovereign Gold Bond (SGB) Scheme.
In the E-gold trading, you can purchase of non-physical gold in small quantities which can be converted into physical form under certain conditions. So, 1 unit of e-gold is equivalent to 1 gm of gold. Consequently, gold ETFs are similar to mutual funds. Here you can purchase units online and keep them electronically in a Demat account.
Read also: How to open a share trading account?
Why Invest in E-Gold?
The commodity market always dominated by precious metals like Gold and Silver. You can buy and sell E-gold units through the exchange (National Spot Exchange) just like shares.
So, for purchasing commodities in NSE, it is necessary to have a Demat account. You can buy electronic gold in small quantities and keep it in the Demat account for long-term financial goals. So, you allow you to buy gold in smaller denomination such as 1, 2, 3…grams. This is a crucial reason for the popularity of E-gold investment among Indian Retail Investors.
Meanwhile, according to target, you can always sell the electronic units with a click of a button. Therefore, you no need to worry about the safe-keeping or purity of gold. It is more convenient to buy and sell than physical gold.
Also, E-gold can be converted into physical gold at any moment, and you can take physical delivery of gold through the exchange.
Also, we have some retrospective reasons to invest in E-gold.
Consistent Value Appreciation
Over a few decades, the gold rate has a consistent appreciation. So, this gives investors the purpose to invest in gold.
Good against Inflation
Nowadays, gold is treated as a hedge against inflation. So, despite market downfall, global fears, trade war, and currency volatility in the market, gold investment offers relief to investors.
Scope of Long-Term Investment
Experts always recommend long-term investments. So, in this case, the consistent appreciation in gold rates becomes enough reason for long-term investment.
How to Invest in E-Gold?
These are the simple steps of E-gold investment.
1. Open a Demat Account
Firstly, investors are required to open a Demat account with any of the Depository Participant (DP) impaneled with NSEL, India.
The exchange has following authorized Depository participants (DP) who will allow retail investors to invest in E-gold.
You can maintain a separate Demat account for equities and commodities or jointly.
2. Start Trading
When you have opened your Demat account, start trading in E-gold. Commodity trading time in India is from 10 am to 11:30 pm from Monday to Friday. The trading settlement is done on T+2 days (date plus one day).
3. Physical Delivery
If required, you may take physical delivery of gold, by surrendering the required units to the exchange. Nowadays, there are three delivery centers of gold in India – Delhi, Mumbai, and Ahmedabad.
Advantages of E-Gold
- E-Gold investment allows a seamless transaction with high liquidity. Investors can place buy/sell order during the long trading hours of NSEL, from 10:00 am to 11:30 pm.
- Gold rates on NSE vary according to the Indian market rates.
- Investors are allowed to buy/sell gold in small denominations – 1gm, 2gm, 3gm, etc.
- E-Gold transaction cost is very low in comparison with stacking physical gold in your bank locker.
- Under the Securities and Exchange Board of India (SEBI) regulations, you can be assured that the quality of your gold will never be compromised. So, no impurity risks.
- E-Gold eliminates the risk of theft.
Disadvantages of E-Gold
- There is no such personal attachment of holding the E-Gold in your Demat account.
- Account hacking could be an issue sometimes. So, you have to maintain the secrecy of your login credential and ensure that the account is protected.
- The storage charge of E-gold is 60 paisa per unit per month.
What is the Gold ETF?
Simply, Gold ETFs is another mode of gold investments. To clarify, Gold ETFs are open-ended Gold Mutual Funds. That is also known as paper gold.
These funds are maintained by the AMCs (Asset Management Company). These AMCs are listed in the leading stock exchanges. So, Gold ETFs offers investors a secure way to access the gold market. They are also providing the benefit of liquidity with an underlying gold purity of 99.5%.
We Indians are passionate about gold. This is not just passion, but emotion too! These emotions inherited generation by generation with the traditions we observed and practiced in India for long. So, you can imagine the future of gold investment in India.
Of course, there is lots of mixed opinion about E-Gold investment. But certainly, E-Gold changes the way of gold investments and become a big hit among the Indian Retail Investors. Therefore, investors include E-gold as part of their investing strategy.
Investors are requested to study more about gold investment and consult with their financial advisor before investing in E-GOLD.