Bewildered about e- gold? Read this.

By SiliconIndia   |   Friday, June 24, 2011   |    2 Comments
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Bangalore: Looking for an easy way to acquire and accumulate gold in small quantities over a period at competitive prices? "E gold" and "gold exchange traded funds (ETF)" is the solution to this. Puzzled about what the term e gold stands for? E gold is a digital gold currency operated by Gold & Silver Reserve, and allows the instant transfer of gold ownership between users. E Gold provides the option of accumulating gold electronically, unlike the earlier times when people purchased gold as jewellery or coins from the banks. Gold as an investment class has certain advantages as it is less volatile as compared to equity, its value remains stable over a period of time and act as a hedge against inflation. Though it has a low return potential, still liquidity is high, has a low holding cost and diversifies investment. How it works? Since e-Gold can be purchased only in an electronic form, you need to have a demat account. You cannot access the same account you use for transaction of shares. Hence, you need to open a separate demat account with one of the depository participant empanelled with the National Spot Exchange Limited. The list of such depository participants can be downloaded from the web site of National Spot Exchange. Investing in Gold ETF also comes with certain advantages: Low Cost: When you purchase gold in physical form the cost factor is high when compared to electronic form of gold. In addition to which the jeweler who sells the gold to you adds the making charges and if you return the gold he deducts the making charges. So invariably lose on certain amount in this process. If your purchase consists of buying gold bars from bank, you land up paying a premium of 10- 15 percent over the market price of the gold. And bank does not repurchase gold coins. Transparency and uniformity of prices: You will be interested to know that the purchase and sale of Gold ETF and e-Gold is done through screen based prices, and hence the prices are same across the country, making it more apparent and standardized. Convenient to buy and sell: E gold can be purchased through a online portal or just a phone call. Similar way it is very easy and convenient to sell the electronic gold in case you need money or want to liquidate your holding. Easy assets allocation and rebalancing: E-Gold & ETF has made the concept of purchasing paper gold easy and convenient, people have started allocating some portion of their investment in gold. It is very necessary to rebalance your portfolio periodically to take the full benefit of asset allocation concept, and this is convenient with the purchase of paper gold. Cut off on storage and insurance: with E gold purchase you don't have to spend on storage and insurance. You don't need to have a locker rented or even insurance. The Gold ETFs are backed by gold which is kept with custodian of repute. The SEBI made it mandatory for the auditors of the Gold ETF schemes to physically verify the gold , giving an assurance to the investors that the Gold ETF are backed by physical gold.
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Reader's comments(2)
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