What is e-Gold and e-Silver ?

First you heard Gold futures, then someone told you about Gold ETF and then you read somewhere about the Gold Fund. Now, these days, it is possible that you hear financial planners recommending you to invest in gold through e-Gold route. Yes, E-Gold and E-Silver are good ways to invest in those precious metals ,and hence, you should know what are they!

India has a new stock exchange called National Spot Exchange limited (NSEL). It is a national level, institutionalized, electronic, transparent spot market. It deals only with spot products. This means you can buy spot products in electronic form and whenever you wish you can convert that from electronic form to physical form. Currently NSEL provide such transactions for following 6 metals:

1. e-Gold
2. e-Silver
3. e-Copper
4. e-Zinc
5. e-Nickel
6. e-Lead

To explain it more clearly, lets take the example of E-Gold.

Scenario -1

1. Suppose you bought 10 gms e-Gold from NSEL
2. NSEL will credit the gold in your Demat account
3. After few months/years, you decide encash gold. So, you will sell that on NSEL
4. You’ll get money while gold will be debited from your Demat account

Scenario-2

1. Suppose you bought 10 gms e-Gold from NSEL
2. NSEL will credit the gold in your Demat account
3. After few months/years, you decide to exchange it with real/physical gold for jewellery
4. You will go to authorized gold shop and exchange your DP slip with real 10 gms gold

Similar cases with e-Silver and other metals

Advantages of e-Gold

• No regular fund management charges as in case of Gold ETF
• No worry of theft loss as gold is stored in e-form. So, it’s safe!
• Transaction charges are low and one-time only (2 time if you decide to sell e-gold on NSEL)
• You can exchange it with real gold whenever you wish
• The method is getting widely acceptable

We’ll soon post another article on ‘How to buy E-Gold?’ – Please leave comments below!

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Tags: e-Gold, e-Silver, Gold, gold etf, Gold Exchange Traded Fund

Category: Blog, Gold Units