This is yet another post from the Suggest a Topic page, and this time we’re going to look at the E-Gold and E-Silver series from NSEL (National Spot Exchange Ltd.)
NSEL enables you to buy gold, silver and copper in electronic form, and hold it in a Demat account.
This opens up another avenue for people interested in buying metals electronically, and now you have another option in addition to gold ETFs, and trading in the commodity exchange.
An Overview of buying E-Gold, E-Silver or E-Copper through NSEL
Opening a separate Demat and Trading account for trading in NSEL
First of all you will have to open a Demat and Trading account with one of the authorized participants with NSEL.
This has to be a separate trading account from the one that you might be using for trading stocks.
There is a list of authorized depository participants (DPs), and you can open an account with any of these to start trading in NSEL.
You can expect to pay an initial charge of about Rs. 350 or so for opening the Demat account depending on who you open this with, and then expect a slightly lower AMC (Annual Maintenance Charge) of about Rs. 250 or so every year on this account.
Some DPs might offer you a scheme where if you give them a refundable deposit of Rs. 2,000 they will waive off the opening charges, and subsequent AMC, so you can check that up.
To open an account go to this link and look up a member in your city, and talk to them.
You will require documents such as PAN, 3 passport photographs, bank proof, and address proof.
Buying E-Gold, E-Silver or E-Copper through NSEL
Once you have your account set up, you can then carry out transactions. You can buy gold, silver or copper, and one unit of the E-Series is equivalent in the following way:
1. E-Gold: 1 gram
2. E-Silver: 100 grams
3. E-Copper: 1 kilo
The commission to transact is about 0.5% if you take the delivery, and 0.05% for intra – day trading. I use the word about because these might differ from one broker to the other, and I wanted to give you gauge of what you can expect.
You can trade the E-Series from 10:00 in the morning to 11:30 in the night on weekdays, and the settlement is done on a T+2 basis.
The price of the three contracts is visible on the website of NSEL, and once you buy a contract, it will be credited to your demat account after settlement.
Converting E-Gold, E-Silver or E-Copper in Physical Form
You can hold the E-Series products in Demat form, and you also have the option of converting it into physical form – this is known as rematerialization.
There are two key things to note here:
1. Rematerialization is currently not done in every city, so if you need this option, then check with the agent first.
2. VAT: When you rematerialize you will have to pay some rematerialization charges (which will be in the range of Rs. 200 for 10 grams gold), but the VAT might be a bigger amount based on how much electronic quantity you hold.
Currently, there are no holding charges, but I don’t know how far this will continue, so you can expect to pay holding charges sometime in the future, if not immediately.
Information I couldn’t find on E-Series Products
There were a couple of things that I wanted to find out, but wasn’t able to get to, and I thought they were meaningful enough to be shared here, and see if anyone else knows about them.
Does SEBI regulate these E-Series Products?
If someone faces an issue with NSEL, or the E-Series products, then who should they address it to. Can they go to SEBI? Is SEBI actively regulating it or does it fall under the purview of some other agency.
Does anyone hold the underlying physical gold?
Gold ETFs hold underlying physical gold equivalent to the number of units of funds they have issued, and they publish the data periodically, but I didn’t find information on who holds the physical gold, or if at all it is being held at somewhere at all times.
If everyone who holds a E-Series contract requests for gold rematerialization then what will happen.
Conclusion
There are no silver ETFs right now, so this is an alternative if you’re looking to invest in silver, but there are gold ETFs that you can look at if you’re looking to invest in gold.
This product doesn’t have a long track record, so even if you are interested in buying E-Gold or E-Series – I’d say it’s better to be safe than sorry, and start off with smaller quantities.
Hi Ankur,
This is for E-gold, E-silver from NSEL and NOT equity trading, I confirm.
It might be useful for you to check with the Karvy point of contact for Hyderabad (details I had posted) and determine why there is such a gap between what has been offered to you and what is available at Hyderabad. Request you to share the learnings, once you have been able to compare the details between Karvy.
Sincerely,
Sriram
Hi Ankur,
Looks like Karvy has multiple plans, because in Hyderabad where I have taken the rates are fixed and much cheaper. I am afraid the brokerage charges offered to you are pretty high, and vary with the price of gold!
Sharing my brokerage plan with Karvy, in my recollection, this was the only plan they had to offer me.
Opening charges 200/- one time payment
Annual payment 300/- Every year
Brokerage is fixed, irrespective of the price of gold/silver
10Rs per gram of gold
30 Rs per gram of silver
So for buying one gram of gold, the cost is (assuming X is the price of a gram of gold)
X+10+1( one rupee stamp duty)+4.15 (service tax which seems fixed, irrespective of the price of X)+ Transaction charge (.31)
= X+15.46Rs
P.S: The service tax and transaction charges (transaction charges vary basing on price, but only in the second decimal) might be lesser, every time I bought gold I also bought silver and hence unable to determine the exactness of what you are asking.
FYI – Karvy Hyderabad – Mr Rajendra Ph: 04067406004
Hope this helps,
Sriram
Hi Sriram,
The price you have written is for Equity trading not for commodity trading like E-Gold from NSEL.
Can you pls confirm
Thanks
Hi Manshu,
Thanks for all the information related to Gold.
I am planning to invest in E-Gold, When i contacted Karvy for opening a comodity trading account they explained me the charge like this :
Demat Account = 375
Broking account opening charge =250
Brokerage = 50 paisa on Rs 100/- (1 unit = 2800 brokerage =14/- )
Transaction Charge = Rs 20/-
So if i buy one unit it will be 14+20= 34/-
Is it worth opening account with Karvy ?
I’d much rather buy a gold ETF than bother to open a new account for E-Gold.
Dear ,
I Want to invest in E-sliver & E-Gold . Where I Have Contact for Investment. Plz. Suggest Me. My Cont. No. is 9971006567.
SIR,
I WANT TO INTRADAY TRADING IN E-SILVER. CAN I DO IT OR NOT. PLEASE SUGGEST ME.
Hi
Now a days more and more investors are interested in bullion (gold & silver) because of high returns in last few months and so want to invest in it.
I found many question about it in this forum and so thought to write a small post on various ways of investment in bullion for novice investors but I must add that the bullion market is highly volatile and because of its volatility it is highly risky as well. So please think many times before you invest in it.
There are a few ways by which one can invest in bullion like
1. Thro jewellers in the form of bars and coins. It is best to invest in genuine rupee silver coins of British era as it is available in the market at reasonable price (previous day price are there in newspapers) and you can sell these coins easily in bullion market as well. A nominal difference is there in sale and purchase price of these coins. Similarly you can invest in genuine gold guineas. NEVER invest in jewellery for investment purpose.
2. Thro Institutions like banks, post offices, MMTC etc. You can get quality product but the prices are normally 10-15% high on various accounts. Pay the cost and the Gold is all yours. But no buyback. You can purchase gold bars from gold refiners as well.
3. Thro Gold ETF. This is one of the better and safe ways to invest in gold. The gold available here is in paper form only and not in physical form and so question of purity arises. You have to pay full cost at one go. Purchases are made thro ETFs and so the sales. No physical gold against your ETF but you can purchase physical gold from the sale proceeds if you want one. Also no silver ETF is presently available..
4. Thro NSEL. It is called E-Gold and E-Silver at NSEL. You have to trade in E Silver or E Gold thro brokers that are registered with NSEL. (The list is on NSEL website). No question of margin money, you have to pay in full at the time of purchasing E-Gold/E-silver. You will get bullion in E form in your demat account. But if you want you can convert E-Gold and E-Silver in physical form as well after paying making and delivery charges and following their procedure of delivery.
5. Thro NMCE Ahmedabad. The dealing is done here through brokers registered with NMCE. Physical delivery is also available.
6. Thro MCX. The dealing is done through brokers registered with MCX. Gold is available in lots of 1 gm, 8 gms, 100 gms and 1 kg and silver in 1 kg, 5 and 30 kgs lots. Here gold and silver are available in the form of future contracts. You have to buy a future contract for the required quantity by paying initial margin of 6-12% (as fixed by exchange from time to time) and to pay balance amount as and when demanded (you must let your broker know your intention of taking delivery). For physical gold you have to wait till expiry of the contract date (you have to follow the procedure for taking delivery as laid down by the exchange)
Note: You can sell your contract before expiry and can pocket profit if difference is plus or pay loss if it is otherwise. So one can say, this is not an investment but a speculative trade. A novice should not enter into such practice
The trading in bullion (in exchanges like NSEL, NMCE, MCX) is done through brokers, like Religare, Sharekhan, Alankit, Geojit Comtrade, Karvy Comtrade, Angel Broking, Ventura, SSJ Finance, India Infoline and many others. (For details you can go through their respective websites). Beside cost you have to pay brokerage and other taxes and duties etc. For taking delivery of physical gold, you have to pay additional amount as delivery charges and you have to make your own arrangements for taking delivery, which is available in few cities only (may be thro your brokers but you should told them about this before entering into any contract)
A few more words worth mentioning, the dealing in bullion particularly in physical form is not as easy, for a novice, as seems above (may be not as difficult as well). You should or better do your homework before you enter in bullion through this way and get all the information from your broker as well.
When you trade through a broker it is immaterial that a broker has an office in your city or not as all information and transactions will be made thro electronic medium but it is better to have one in your city.
Umesh
1) from what i have read, we can buy whatever no of units of e-silver we want from nsel and hold them till as long as we want 5years,10years…so on. the yearly charges would be apx rs 300.
2) is there no mutual fund where we can do a monthly sip for silver?
No right now, there isn’t any silver ETF or MF in India.
Hi Manshu,
I have read through these posts and really informative to me. Basically I have an idea of invest in e-gold and found all your views in clarifying me many basic doubts. I am from Pune. I found in the list of DP that there is no agents in Pune. Can you suggest me how to go about? Also is there is any minimum limit for investing in E-series.
Balaji.
I’m afraid I don’t know how you can go about doing that – someone else asked this as well, but I simply don’t know the answer to it.
hi Manshu,
Appreciate your efforts, i enjoy Reading your views and analysis it gives a completely different perspective and has been extremely helpful to me.
i have recently purchased gold etf and planning to go in for more on regular basis
I was given to understand that units purchased through etf can be converted into physical gold.. is this true if yes how can it done?
after Reading all the comments above, it seems we all are in divided minds about e-gold/silver, though it seems to be lucrative option. i’m looking forward to study and final analysis on it.
regards.
Jomy
Great to know that, as for your question – there is no way to convert a gold ETF unit to physical gold for a retail investor. You will have to sell it on the exchange and get cash for that.
You can’t exchange ETFs for physical gold.
I’m afraid I don’t see myself coming up with any further analysis on the E Series – there just isn’t enough quality information available out there for me to say anything new.
Sir,
How much margin money is required to buy one ETF GOLD Unit?
Please reply.
-Vivek Vatve
vrvatve@rediffmail.com
Don’t know that sorry – must depend on your broker.
Thanks Manshu ,
So for a retail investor NSEL is the only e-way of buying silver.
Which is a good NSEL broker-cum-demat would you guys suggest ? I am in Bangalore..
Yes, to the best of my knowledge – E Series is the only way to buy silver apart from buying physical silver. I don’t have any recommendation on who to select. You can try out some folks from this list, and see who provides you the best rates.
Hi one newbie question, whats the difference between e-silver(purchased from nsel) and the one purchased from MCX & NCDEX commodity exchanges. i see that nsel & commdity exchange rates differ.
The MCX NCDEX is a Futures contract that you will have to settle at a future date and pay the difference, and E Series is a unit that you could own and not have to settle at a certain time. Both of them track the same underlying commodity but are different products.
I lost more than Rs 10 lakhs worth of E GOLD and E SIlver due to unscupulous conduct of a Broker from Kerala I thought E commodity it was safe but it is not so. Brokers can keep it in their pool account without putting it in your demat account. They can utilise your holdings in their account to lend somebody. They can utilise the same to thrust you some contracts in MCX without giving utilisation report and it will appear as if they are funding your positions since they will charge interest as well. Once the market goes against you, the broker will ask you to sell the E commodity which you thought was safe and you loose everything. Once the broker is aware that you have some money in the form of E gold he is not worried to give you positions even more than permissible to you since he knows that he will get the money back once the larket turns against you. He unsuspectingly can inflict great loss on you. Be careful with E Gold and E Silver if you are also trading in MCX side by side.
abagchi – from your comment it appears to me that you had a loss in MCX trading, and to cover that your broker sold your E Gold and E Silver which you thought could not be touched, is that a correct understanding?
hi,
wanted to check if fellow boad members have faced this issue or not:
Religare is not assisting customers to trade in eGold/eSilver at the National Spot Exchange.Very weird indeed as they are the authorised DPs.
Not sure about the reason and the complete lack of transparency when it comes to information being sent across to customers
Want to know if other members have faced this issue with Religare and if yes, what is the way forward? Can this be taken up with SEBI?
cheers
navigator
Navigator,
I don’t have any experience but I do know that they are not regulated by SEBI so you can’t take it up with SEBI. When you say not assisting, what do you mean by that? And curious to know which city you are in too.
Yes…
As per the instruction by the senior authorities from Religare, they lost the licences I think… Recently they asked me to sell all my e-gold units with them since there was an urgent notice… but they have not given any proper reason for it.
I’m also eagerly waiting how to represent this issue…
Hmmm, I don’t know anything on how to go about doing it but it’s quite weird – I’ll ask a few friends who might know something about it and let you know in case I find something.
hi,
plz tell me how i trade E-GOLD\SILVER\COPPER . where i purchase from and then i sale. i have DP in stock market. plz proper way to trade and tell procedure.
thx
dinesh bishnoi
Procedure is to talk to a broker who deals with them and open a separate DP account for them. The one that you use for shares will not work here, you can call up Religare or some of the other ones given in this list to open an account and talk to them.
Hi,
As I had mentioned earlier. Just wanted to update that Karvy has a fixed yearly cost of 300/- irrespective of the number of grams of gold and silver a retail customer holds.
Will be using this account soon, Manshu, I am trying to develop a point of view on buying silver, if there are any trend related pointers you have in the INR context please let know.
If there is anything you would like me to share with regards to E-gold E-silver with Karvy, please let know.
Thanks for the time,
Sincerely,
Sriram
Thank you for all your comments Sriram – I’m afraid I haven’t found a good resource on silver prices in INR, and there’s nothing I can point you towards.
I deeply appreciate your offer about the E Series thing. I will do a little more research on this and see if I can find any new info….will contact you then. Thanks again!
Thanks Manshu, for spreading the knowledge on E-gold and E-silver,
I think, there is some info I have gathered in these fronts that might serve as inputs to your assessment, hope this helps.
I have tried to make my assessment of how National Spot Exchange makes money, I called up National Spot Exchange , and they claim to do the following,
Every day they buy 5Kg of physical gold for Delivery, (not sure how much they buy of silver) for E-gold and quote a price , the retail customers such as us, bid and buy, to this pool of 5Kg, any other retail customer wanting to sell , can also sell during the session. Hence, overall NSEL makes their first profit buy quoting a price that covers their cost and profit margin. When they take 5Kg for delivery, they offset their price risk by buying gold futures (Now how they manage this price risk I am not clear, but this is what folks at NSEL said). But took comfort from the fact that , all the E-gold that is purchased by retail is thus backed up 100%, and NSEL is also having a profit making proposition.
Storage Costs:
The NSEL bills the customers for storage costs, every month on the last saturday of the month. More details on the links below
1.5P per gram of silver, [Annexure 4 Storage /Transaction/Delivery charges] http://www.nationalspotexchange.com/NSELUploads/Trading_Doc/2010/Circular067_2010.pdf
NSEL charges 60P per gram of gold [Annexure 4 Storage /Transaction/Delivery charges]
http://www.nationalspotexchange.com/NSELUploads/Trading_Doc/2010/Circular041_2010.pdf
Overall, NSEL bills retail customers, by intimating the DP (DP is the intermediate/broker through which customer would have obtained gold/silver), the DP is supposed to recover that cost from customers from 15 days of intimation.
I think, brokerage firms have some levy, here and hence folks like Karvy charge a fixed 300 Rs per year cost for all E-gold and E-silver customers, irrespective of the number of grams of gold/silver units customer holds. [I will check this part up and keep you posted]
Quality of Gold and Silver:
The quality seems to be at par with Gold and silver that gets traded in international bullion markets as well. I tried to look for this quality grade in International markets like US and Canada.
Gold- Grade 995 , Fineness 995[Quality specification section]
http://www.nationalspotexchange.com/NSELUploads/Trading_Doc/2010/Circular041_2010.pdf
Silver- Grade 999, Fineness 999 [Quality specification section]
http://www.nationalspotexchange.com/NSELUploads/Trading_Doc/2010/Circular067_2010.pdf
One quick question, by any chance you can point to price movement of Silver in INR for the past 5 years, say. Not sure where to get this data, for gold atleast there is this GoldBees data that we can approx for getting the historical trend.
Thanks once again,
Sincerely
Sriram
DEAR
I WANT KNOW ABOUT BROKER WHO PROVIDE ONLINE TRADING PLATEFORM FOR E-GOLD , E-SILVER(MEANS WHO PROVIDE ONLINE TRADING IN NATIONAL SPOT EXCHANGE FOR E-SERIES)
PLZ HELP ME TO SEARCH BEST PROVIDER
You can try brokers like Religare and they may be able to help you. Call up their call centre and see what happens.
Hi Manshu,
I was checking Karvy for E-gold, E-silver and found the following information. For every gram of e-gold there is a 10Rs brokerage, for every 100 gms of silver there is a 30Rs brokerage.
All the e-gold and e-silver are backed up by physical gold and silver, both Karvy and National Spot Exchange person confirmed this.
There is an additional 10Rs cost for every 1Lac turnover (buy/sell)
Cost for opening an account is 200/- + 300/-, where 300/- is a yearly recurring expense.
Now, when I look at GoldBees – Gold ETF, notice that they have an anual expense of 1%, which means that if you have 1Lac worth Goldbees, they would take 1000/- from it annualy!
Buying Gold Bees from a low cost brokerage such as reliance, will cost about 8 to 10 Rs per gram of gold (They have lower plans of brokerage via RMax, but to use it effectively one has to buy/sell considerable quantities of goldbees)
To conclude, looks like E-gold and E-silver are safe, and the clincher is the fixed low AMC cost of 300/- Rs.
Please feel free to let know if there is any other consideration that one needs to analyze for going to E-gold instead of gold ETF.
Thanks for the time,
Sriram
Thanks for your comment Sriram – there are several things about the NSEL thing that I haven’t been able to understand and that’s got to do with how they are making money, who these “they” are. I mean who creates these units, where are the units stored, who is auditing them etc. How are the units created in the first place?
Who is bearing the cost of storage of gold and what grade of gold is stored there etc. I’m not clear about many things and maybe its just my ignorance but personally I’m willing to pay extra for something that I understand a lot better than to invest in this.
Hi All,
Thanks for all the information given in this site. I have a doubt regarding the term used as “T +2 Basis”. Can anyone tell me what is meant by T +2 basis and how is it working.
Thanks,
Anosh
T is the transaction date, and plus 2 means 2 days after the transaction is done. That’s the day when the unit is credited.