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What is E-Gold?
Indian people always had and have a special love toward gold. Well tradition also plays an important role in this love interest. But there has always been problem in safeguarding the physical gold from theft and spending over lockers for the protection of the physical gold. Well, then came Gold ETF (exchange-traded fund), an alternate for physical gold in electronic form. The next step towards this is the E-Gold.
Investors can buy such electronic gold in smaller quantities and can sell the same when they yield a profit.
Who provides the E-Gold?
E-Gold is provided through the National Spot Exchange Limited (NSEL), a national level, institutionalized, electronic, transparent spot market. This is different from the National Stock Exchange. Investors can buy and sell E-Gold through any broker who is affiliated to NSEL.
What is required?
Investor needs a Demat account with any of the depository participant listed under NSEL, to hold E-Gold as it is issued in electronic form similar to that of equities. Any existing demat account used for equities cannot be used for this purpose. So a separate demat account is required for E-Gold.
Trading units
One traded unit of E-Gold is equal to one gram of 99.9% of pure physical gold (coin or bar). The physical gold equivalent to the traded gold will be safeguarded in a vault decided by the exchange and the same will be insured.
Trading hours and Settlement Period
E-Gold can be traded from 10:00 a.m. till 11:30 p.m. on weekdays. The settlement is normally done on a T+2 basis.
Conversion & Liquidity
The biggest advantage of the electronic gold is that it can be converted to physical gold for a minimum lot of 1 gm without any difficulties. NSEL offers the investors to take the physical delivery of E-Gold in denominations of 1gm, 8 gms, 10 gms, 100 gms and 1 kg in form of gold coins/bars. Same way, E-Gold can be liquidated to cash at any point of time for market rate.
Applicable Charges
| Transaction Charges | The exchange will take Rs 20 per lakh as turn over charges for both buyer and seller. This will be taken on a monthly basis, and applicable for all the transaction executed. | |
|---|---|---|
| Conversion charges | 1 gm coins | Rs.100/- each |
| 8 gms / 10 gms coins | Rs.400/- each | |
| 100 gms coins | Nil | |
| 1 kg bar | Nil | |
| Storage Charge | The investor has to pay storage charges to hold the gold in the vault of the exchange which is 60 paisa for 1 unit of E-gold for one month. It should be pay within 15 day of intimation. | |
| Delivery Charge | Delivery charge is collected for the delivery of the physical gold which is Rs.200 per lifting charged by the NSEL. | |
| VAT Charge | The investor has to pay the VAT/GST charges and all other local taxes charges on delivery of gold. The VAT charge will be 1% of the value of the items. | |
Delivery Centres
Delivery of physical gold can be taken from delivery centres of NSEL in Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Jaipur, Kochi, Kolkata and Mumbai.
