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,
I am dealing Gold & Silver jewellery’s shop sometime i have not time buy or sale and bear not a fix borkrage charges .So I want to know when i start buy or sale E-Gold ,E-Silver when it will up in prices then i would wait someone who would rady to buy in up priceing or nothing worry about it.or NSEL will take-care it, i have not knowldge ..
Hi,
I went through the NSEL website and got a list of authorized DPs. But when i go through the mentioned DP’s website, there I couldn’t find any information about commodity investment throgh NSEL. Such information appears on their website:
• Equities & Equity Derivatives (NSE, BSE)
• Commodity Futures(MCX, NCDEX)
There they do not mention the name of NSEL anywhere.
Even I talked to one of such brokerage house, they even say that we dont know, we will gather information on these and let you know.
Is there any different term that they use for commodity investment through NSEL that I do not know & should ask to them????
Regards,
List of member of NSEL (go through this website for the members list of your city/state ) http://www.nationalspotexchange.com/SitePages/MemberListForAccOpening.aspx
Problem is that brokers are looking to promote MCX business only as it is future market and lead to very high turnover with low margin amounts.Most of the houses may have started NSEL as it can run alongwith existing infrastructure..Very few are interested in promoting NSEL as overall turnover and incomes are mere peanuts..so possibly,one can’t find much information about NSEL on brokers or DP website.
Sir,
First of all, I would like to say that you didnt get me . I am not talking about the volatility of commodity prices and all that. Why should I? I was talking about the way of investing through “NSEL”.Normally there is a tradition of buying silver through shops(obviously there was no other alternative).And also in the above article” E-Gold and E-Silver from NSEL” it is written that “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”.Due to this statement I asked such question. I hope u have understood what I am saying Sir. Anywas Thank you
NSEL is an exchange (for commodity transactions only) like NSE, BSE (for stocks and shares) and MCX, NCDEX (for commodities) and these exchanges are set up as per prescribed rules and regulation.
I do not know anything about its track record etc.
Even if tomorrow NSEL packed their bags,they have to return margin money lying in the investors account and provide delivery of commodities to the investors.
Peoples are not much interested in buying gold-silver in demat form, probably because they can’t show e-gold to neighbors….unlike to jewellery’s.
Hi,
Before starting the investment,I want to ask is this safe to invest in e silver , or e-gold such a way through NSEL?? As it is quite new to the market and still many people do not know about such invetment.
Regards,
I do not know what safety aspect you are talking about. And IMO, no one can answer, (to ones satisfaction), questions on safety aspect of an investment .
If it is about NSEL, you better visit the website of NSEL, http://www.nationalspotexchange.com to know more about NSEL.
If it is about risk involved with investment in Gold and Silver, no one can predict. These two commodities always used to be volatile but were more so in recent past. Some months back Silver was trading @ 73-74000 per kg (april 2011) and then dropped to 46-47000 (september 2011) and now 52-53000. Similarly in gold, there is a continuous wide movement in price since July-August 2011.
Further I may add that every investment carries some amount of risk. No investment is 100% safe or risk free. If you want to know more on risk visit following link, this is an article “15 Types of Risk that affect your Investments” written by Hemant, a financial planner and a regular writer on financial aspects. http://www.tflguide.com/2011/09/types-of-risk.html
IMO, One should invest only when one is completely satisfied.
I want to invest in silver in electronic form. So i want to open a demat account for that with one of the members of NSEL.As I am a long term investor.I want to buy units at every dip and want to keep it year after year. Can I do this.Or I have to sell it after a certain time???
Hi
You can buy and sell esilver as and when you wish. If you want to keep, you can keep it for year after year.
Physical gold is stored in warehouse in Laminton road, mumbai and its security is undertaken by international firm Brinks Arya ( Takes care of ATM money also for few banks) – Source NSEL website
However I did not understand following thing…
If I buy e-gold , there is someone who is selling e-gold.. but system should have e-gold in first place with person selling…so
“How is the physical gold initially deposited in the warehouse – Is it NSEL doing doing the purchase from market based on demand from buyers?
-Thx
Dhami
I want buy e-silver but I want know that any time limit is sell to e-silver such as MCX
or Not any time limit. What we can e-silver hold with long time. What we can sell anytime.
Please request to you reply me.
Hi
There is no time limit to sell eSilver. You can hold it for long time and can sell anytime.
Purchase of silver at MCX is different, at MCX you are not purchasing silver but a contract to purchase silver in a stipulated time and so you pay only margin money and not the full value of the contract. To complete the contract you have 2 options either take delivery on the expiry of the contract or square off the deal by selling the contract before expiry (normally it is 5 days before expiry). Hence there is a time limit.
While at NSEL you are buying eSilver after paying full value and after purchase it is your asset and so no time limit to sell.
I hope you got the difference between the two options.
what are the charges to convert 1kg of silver in to physical form detailed
I just want to share the following information. NSEL is governed by three regulatory bodies viz. Forward Market Commission (FMC), State agricultural marketing board(SAMB) and Warehouse Development Regulatory Authority (WDRA). It is not regulated by SEBI.
Dear Sir,
What is the difference between Gold ETF & E-gold.
If someone has already answered your query, please ignore this.
Simply put, Gold ETF is PAPER GOLD and E-Gold is GOLD in physical form. Gold ETF can be traded like any other scrip. With E-Gold, you can either take delivery in physical form or sell it to the bank itself. There are, of course, charges which Shri Manshu has described in his article.
EGold is also a form of paper gold and it is not necessary to take delivery in physical form. One can keep it in paper form in his demat account as along one wish to keep. One has a choice to convert eGold in physical gold, if one wants, by following the procedure laid down by NSEL and paying the necessary charges.
Now some gold ETF can be converted into physical gold, the example is Motilal Oswal MOSt Shares Gold ETF.
You can not sell eGold to bank as you have mentioned, as no bank is authorised to purchase it.
Can Gold ETFs be sold to banks?
No, but you don’t need to do that either. You can sell them on the stock exchange any time. Why do you want to sell them to a bank when you will be buying them from a stock exchange?
can we get physical delivery of gold if we purchase it thru MCX ? In MCX is there a concept called ‘ spot exchange ‘ ?
Hi,
I met a Karvy representative in Blore two days back.
I opened the trading account with them. He told that 250 RS for Trading account (onetime) and 300Rs for DMAT. Transaction costs are 10rs per gram for gold and 30rs for 100grm for Silver.
He also offered that DMAT is not needed and they can keep it in the pooled account free of charge. Online transactions are possible only for the commodity in pooled account. I need to issue a note over email to transfer it from pooled account to DMAt account.
Keeping above points in mind, I decided to open only Trading account, and keep the gold in pooled account of Karvy. I am planning to experiment for a year, and then get the DMAT account.
Any such experience?
I want to invest in gold, have already been through the very useful comments on the site already “thanks to you all guys…..”
I still have a doubt : is the VAT applicable on the transactions we do on gold/silver online ???? as there is no physical gold while we are buying, but the value only…as Mr.jeboy mentioned that its applicable over physical delivery.
and is there any site where i can find genuine and current gold/silver rates as per indian rates
give any agent no in delhi rohini area to open e gold account my mobile no 9990473723
@manshu
I believe even the MCX pricing is based on the Intl pricing since India hardly has a share in the silver production or consumption. Peru is the largest producer and China/US are the biggest consumers.
Any idea whom I can ask to clear the price discrepancy?
@shalini
I think I paid 550 as one time a/c opening charges.
I dont remember the brokerage but its pretty minimal I think. You can find all the details on their website.
Yes they have quite a decent online web portal.
I don’t know that – let me check that with someone who might know and then I’ll leave a comment here.
Hi Gaurav,
How much are the account opening charges and annual charges of Religare ?
Do they have online trading account?
I have opened an account with Religare in order to start trading in e-silver and e-gold.
The reason for me to go with e-gold/e-silver is 2-fold.
ETF’s overheads are much more than brokerage we pay for transacting on NSEL.
I can buy as small as 1gm of gold and keep it safe (assuming that NSEL has a strong infrastructure to support all this. Is it asking for too much ???) w/o needing to keep the physical gold.
Anyways I have a question related to the pricing of the e-silver.
Today 21/12/2011, the e-silver being traded was at a buy price of 5517/100gms at around 1:27pm
I checked the prices of various silver products on MCX site and no product was more than 5300.
How is this possible? and How can I confirm whether the e-silver prices are related to which silver product on the MCX? or are these not related at all. In that case how is the e-silver pricing being done?
This is interesting, I lost interest in this product due to some of the reasons I mentioned above and have not paid much attention to them in quite a while.
I would think it is international prices of silver priced in INR but I am not certain if that’s how they do it.
khandare.sachin@rocketmail.com
How to purchase gold through ETF ? I don’t know. So,please give me A to Z information from demat opening to e – gold purchase whole information.
prashant.dhote@gmail.com
No you will not get A – Z information on your email account by leaving a comment here. You are on the wrong site. I suggest you read stuff here and try to make sense out of it yourself but if that sounds like too much then this is not the right website for you.
Doutfull please clear about SEBI watch it or not?
How to open account on e gold