Most of you might be familiar with Gold ETF as an alternate source to investment in physical gold. But, how many of us are aware about the concept of ‘e-Gold’ (electronic gold) which houses equivalent physical gold maintained in exchange designated vault?
Difference between Gold ETF and E-Gold
The basic difference being Gold ETF is an exchange traded mutual fund scheme; whereas e-Gold is physical gold held in dematerialized form which can be traded electronically at National Spot Exchange Ltd (NSEL), in India.
While the main motive of Gold ETF is to track closely the spot prices of the precious yellow metal, it does not necessarily hold physical gold stock at its fullest. On the other hand, e-Gold is a digital gold currency that allows you to trade or even redeem physical gold from your demat account.
Now, that we have learned the differentiation between both the products, let’s carry on with a new distinct advantage of e-Gold.
Soon, E-Gold can be exchanged for Jewellery
NSEL had launched e-Series products in 2010. Though, e-Gold was launched way back in March, it is only now that the investors have fancied investing in such instruments over other sources of trading in, or owning, such products. E-Gold recorded the highest daily turnover of Rs.230 crore on January 19.
In latest development, retail investors can soon exchange their e-Gold units issued by NSEL with selected jewellery outlets, in the form of jewellery, across the country. The Financial technologies-promoted NSEL will empanel around 10,000 jewellers across the country to promote this pioneering e-Gold scheme by March.
The scheme entails an investor to buy e-Gold units from NSEL’s national level electronic spot trading platform and redeem them for physical delivery of jewellery, from transparent jewellers equipped with hallmarking facility, against the surrender of demat units.
Benefits of trading in E-Gold
- Convenience to trade and transparency in price.
- ETFs as fund houses charge for AMCs; e-Gold is digital gold currency.
- E-Gold can be redeemed for physical gold, unlike Gold ETFs.
- In future, e-Gold can be converted into jewellery; unlike Gold ETFs.
- E-Gold is tradable for longer hours than Gold ETFs.
- E-Gold are spot rates of gold, Gold ETFs intends to mirror gold prices.
In a country like India, where people still prefer to buy gold coins from the local jewellers and trading through electronic platforms still constituting a very small part of overall trading volumes; it is hard to realize that the digital gold currency will ever replace the traditional method of buying gold in physical form.
Will this initiative of converting e-Gold into jewellery succeed?