You all know the word Gold and know exactly what it is? Am I right? Yes, Gold is a metal used to make ornaments since it has brighter and glitter property. So most of us like to buy and wear gold ornaments, especially ladies. Often we go for the jewelry shop for buying the gold ornaments. That is the physical mode of the gold. There is another gold named E-gold. Do you want to know about E-gold? Go through this article.
What is E-gold
What is E-Gold? Is it the original metal or something else? What is the difference between E-gold and physical gold? You may reach this type of question when you heard about E-gold. Now, E-gold can be defined as the gold that can be bought in an electronic form. E-gold is a new type of investment plan. In India it is introduced by National spot exchange limited. E-gold can be bought in the form of units similar to shares. 1 unit of E-gold is equivalent to 1gm of gold. Investors can hold it in demat form. E-gold is not original metal; it is differing from the original gold metal. The original gold metal is in the form of physical where as the E-gold is in the form of electronic. You can buy the E-gold in small quantities like 1gm. This electronic form gold can be converted into physical form at any time. So that individual can invest in E-gold for a period to achieve the target amount, and then he can sell it or buy in a physical form. There is no need of worry about the purity of gold in E-gold investment plan. And also which is free from insurance cost and storing cost. This will help to store the gold without the fear of the thief.
Requirements to buy E-gold in India
Buying is E-gold is not at all difficult tasks. You can buy the E-gold from national spot exchange limited. To buy E-gold from this exchange you need to open a demat account (Beneficiary account). Furthermore, You need a client or trading account. You have to open a demat account from the DP that is approved by National spot exchange limited. You should have a separate demat account for buying E-gold, even you have the demat account for trading stock. Do you want to know about opening of demat account, please go through this article How to open a demat account?. You have to produce identity certificate and proof of residence, pan card, photos, MICR cheque copy, etc. to open a beneficiary account for opening E-gold. The processing of opening demat account for E-gold is similar to that of the demat account for stocks.
Process involved in buying E-gold in India
Process of trading in E-gold is similar to trading of stocks. As mentioned earlier you have to open a separate demat account for trading E-gold. After your demat account is ready, you can buy or sell E-gold according to your interest. You can buy E-gold through the online Pan India trading platform offered by NSEL. You can buy the E-gold from these planets as a unit of gold. You will get the E-gold as units from the Pan India platform. You can buy E-gold as low as 1unit, which is the minimum amount you should buy when you purchase E-gold. The maximum amount of units you can buy in a single order is 10000 units. You can buy the E-gold as the multiple of 1 unit. That is you can’t buy the E-gold as 1.5 unit, 2.5 units, etc. You can buy E-gold during the time interval 10 am to 11.30 pm, in India. This time flexibility is giving more attractions for investing in this mode for Indians. When you buy some number of units of E-gold, the exchange will buy the equivalent amount of physical gold for you and store in the vault of exchange. 1 unit of E-gold is equivalent to one gm of physical gold. The gold stored in the vault of exchange offer a 99.95% of purity. As in the stock purchase through delivery buying of E-gold is also require 2 days for coming to your demat account after the purchasing date. This is applicable to sell too. That is it will require 2 days for arriving the cash for selling E-gold units to your demat account. Intraday trading option is available in E-gold trading; however, it will not allow the short selling.
Delivery of E-gold in India
Individual can take physical delivery of his or her E-gold units at any time if he wants. As mentioned above 1 unit of E-gold equivalent to 1 gm of gold. Taking physical delivery is not necessary in E-gold trading. If individual wants to keep the E-gold, then he can. Also he can demand cash against E-gold. Individual can take the delivery of E-gold as a multiple of 8 grams, 10 grams, 100 grams and 1 kg. Individual can take the delivery of E-gold from any of the delivering centre in India. Presently there are 3 delivery centers are available in our country, they are located in Mumbai, Delhi and Ahmadabad. To take delivery from the delivery centre client should submit a delivery instruction slip to the DP along with the surrender request form. The DP will send the units to the account of NSEL according to the delivery instruction slip. They also attest the signature of holder on the transfer request form and give back to the client along with the acknowledgement of delivery instruction slips. The client or his authorized representative should take the delivery after seven days and within 15 days of submitting the application request. If he unable to take the delivery on time, he should liable to pay the storage cost for the entire month. The authorized dealer requires paying VAT, octroi and other taxes at the time of physical delivery of gold.
Charges involving in buying E-gold in India
There are some charges involved in transaction, delivery, settlement, and holding of E-gold. They are listed below:
Advantage of buying E-gold
There are so many advantages for buying E-gold. Some of them are listed below:
Disadvantage of buying of E-gold
As the coin has two sides, this too has some disadvantage. Some of them are listed below:
As a conclusion by considering all these factors investing of gold in the E-gold investment plan is really good and safe. Ease of buying and stock in this mode of trading make it as the most attractive investment plan in India. This will help the people to store the gold in electronic form and will help to avoid the fear of losing.
I find this article very useful and relevant. Due to security concern, many people are no longer interested in purchasing physical gold and gold jewellery. Keeping physical gold and jewellery in a bank locker is also not fully safe because we know about various incidents of theft from the bank lockers. Moreover, the banks charge exorbitant rates to rent out a locker. As a result, many people are purchasing e-gold. The author has meticulously explained the positive aspects and negative aspects of investment in e-gold.
Not only e-gold, there are various other options of purchasing Gold Bond or Gold ETF in lieu of physical gold. Gold bonds and Gold ETFs are becoming more and more popular over the years. I have written an article on Gold ETF (http://www.indiastudychannel.com/resources/174053-Investment-instrument-Know-about-Gold-ETF.aspx). Interested readers can go through this article. In addition, various other articles are available on Gold Bonds and Gold ETFs.
Concluding my comments, I sincerely thank the author for this useful and relevant article on e-Gold. Many gold investors and potential gold investors will be benefitted from this article.