National Spot Exchange has launched a unique investment product in gold on its platform which is among first in India. It will facilitate small investors to invest in gold in denominations as less as 1 gram, and multiple thereof in demat form.
The would work exactly the cash segment in equities functions, offering Gold in the demat form in smaller denominations (e.g. 1, 2 3…… gms). E- Gold is set to attract the millions of small Investors, who would be required to open a demat account to participate in this.
Considering the wide reach of Brokers/Distributors, and the avalibility of E-Channels to trade in this product, it would be just a phone call away or at the click of a mouse across geography. Investors can now trade and invest in gold just like shares. This product is equally suitable for retail investors of equity market and house hold. The clearing and settlement pay-in and pay-out are based on T+2 cycles.
Please find the comparison on how Investment in E-Gold fares with other modes.
Parameters | E-Gold | ETF | Jewellers | Banks |
Form | Demat Form | Demat Form | Bar or Coin | Bar or Coin |
Security | High | Taken care by Fund | Investor’s Concern | Investor’s Concern |
Transparency | Very High | Very High | Very Low | High |
Impurity Risk | Very low | Very Low | High | Very Low |
Pricing (for retail investors) | Transparent. Will be traded in National Spot Exchange | Transparent. Will be traded at NSE | Neither standard nor transparent | Not standard. Huge Markup, 10- 15% ideally i.e. you pay around 15% higher price than prices prevailing in the market. |
Selling Back | Sell back any time on exchange | Sell back on exchange | Conditional and uneconomical | Restricted |
Bid Ask Spread | Very Low | Very Low | Very High | Can’t Sell back |
Denomination | 1 gram and multiple of 1 grams | 1 gram and in multiples of 1 gram | Available in Standard denomination | Available in standard denomination. |
Control on Investments | High Control | No Control | - | - |
Can take physical deliver of gold | Yes | No | Not required | Not required |
Unit holder is interested to take physical delivery of Gold bar/coin, against his E-GOLD units, he can surrender such units to the Exchange and get physical delivery, at any point of time at his discretion, subject to the conditions specified by the Exchange.
Delivery of physical gold bar/ coin will be offered in specified lots/ denominations and at specified locations only, where NSEL has made vaulting and delivery arrangements. Therefore, an investor can opt for physical delivery of gold, only if he has such number of units to his credit (or multiples thereof), as specified herein. Initially Gold will be made available in multiples of 8 grams, 10 grams, 100 grams and 1 Kg and any combination thereof.
Delivery of physical Gold will be made available at Ahmadabad, Mumbai and Delhi. The Exchange will keep on expanding the number of centers in future to offer physical delivery. If a client opts for physical delivery, he can get the same from any center of his choice out of such specified centers.
Charges
Below are the Charges which will be charged by Exchange in respect of transactions, delivery, settlement and holding of this instrument:
Request for Physical Gold
Unit holder is interested to take physical delivery of Gold bar/coin, against his E-GOLD units, he can surrender such units to the Exchange and get physical delivery, at any point of time at his discretion, subject to the conditions specified by the Exchange.
Delivery of physical gold bar/ coin will be offered in specified lots/ denominations and at specified locations only, where NSEL has made vaulting and delivery arrangements. Therefore, an investor can opt for physical delivery of gold, only if he has such number of units to his credit (or multiples thereof), as specified herein. Initially Gold will be made available in multiples of 8 grams, 10 grams, 100 grams and 1 Kg and any combination thereof.
Delivery of physical Gold will be made available at Ahmadabad, Mumbai and Delhi. The Exchange will keep on expanding the number of centers in future to offer physical delivery. If a client opts for physical delivery, he can get the same from any center of his choice out of such specified centers.
Charges
Below are the Charges which will be charged by Exchange in respect of transactions, delivery, settlement and holding of this instrument:
| Transaction charges | The Exchange shall levy the turnover charges Rs. 20 per lakh of turnover to both buyer and seller member on monthly basis. This shall be applicable on all executed transactions. |
| Dematerialization / Corporate action Charges | The Authorized Dealer will be charged at such rate as may be levied by NSDL from time to time towards such Corporate action. |
| Storage charges | Storage charges shall be levied by the Exchange on monthly basis @ 60 paisa per Unit per month. Such charges will be computed based on the holding in the respective accounts on the last Saturday of every month. The person holding demat commodities on that day will be required to pay holding charges for the entire month, irrespective of the number of days for which he holds demat credit. However, an investor holding demat commodities on any day or number of days during such month, but not holding the same on the last Saturday of the month (because he has already sold and transferred it prior to last Saturday), then he shall not be required to pay any holding charges. On receipt of the details of client wise holding from the DP, the Exchange will compute the storage charges based on number of units held by the respective account holder on the last Saturday of every month and intimate the same to the concerned DPs, The DP thereafter shall raise bill on the respective beneficiary account holders. DPs shall recover such charges within 15 days from the date of such intimation. |
| Default in paying the Storage charges | In case of default in paying the storage charges by the client (ICIN holder) before the dead line, the DP shall freeze the ICIN immediately under intimation to the Exchange. In the event of delay in payment of aforesaid charges, an interest @15% p.a. shall be applicable on the defaulted amount from the date of default till the date of actual payment. |
| Delivery charges | In respect of buying and selling of E-GOLD units resulting into demat deliveries, the Exchange will not levy any delivery charges. In respect of lifting of commodities, the Exchange shall levy the delivery/lifting charges and will charge a total of Rs. 200 per lifting, irrespective of number of coins/ bars involved in the delivery instruction. However, if two different clients of the same member take physical delivery even at the same point of time, it will be construed as two deliveries and therefore, Rs. 400 will be charged by the vaulting agency. |
| Making charges, Packing charges in case of Gold Coin | In addition to the charges imposed by DP and Depository, the Exchange shall levy the following charges on account of cost of making, packaging and refinery certification charges: |
