This is the last of the 4 part series about ‘Investment in Gold’
e-Gold
• One of the most interesting investment cum consumption method of investing in Gold and picks the best aspects of all the previous investment methods
• Buy gold in minimum units of 1 (no fractional ownership) at prevailing market price - [similar to Gold ETF]
• Demat account to hold e-Gold is different from the one use for Gold ETFs / stocks – [no hassles of holding gold in lockers]
• Gold is of 995 grade (the highest grade in gold) – [purity is guaranteed]
• Brokerage is lower or equal to the brokerage as in gold ETFs – [overall transaction costs are lower]
• Your gold is held in a warehouse managed by the National Spot Exchange (view it as the gold in a very large locker) but you hold it in demat form - [safety, from a perspective of storage, as good as Gold ETFs]
• You can either sell gold and book profits (like you sell stocks / Gold Mutual Funds / Gold ETFs) or take delivery of the gold in the form of coins or bars by paying applicable state VAT and handling charges - [ease of selling]
• Trading window is 10:00 am to 11:30 pm - [unlike Gold ETFs or Gold Mutual Funds]
• Flexibility of buying any amount of gold without the hassles of getting a locker
• Tax treatment on the profits made by buying and selling of ETFs in NOT AS tax treatment of profits on stocks / shares.
• Not all brokers who deal with equity are brokers in e-Gold
Gold Futures
• Started in India in 2004; comes under the category of commodity trading
• The most rewarding AND riskiest of all investment methods in gold
• Works like stock futures
• You trade (buy / sell) large amount (multiples of lot size) of gold in a single transaction
• Minimum lot size for a gold future contract is 1 kg
• Not all brokers who deal with equity are brokers in Gold futures
Risk Reward Ratio (in decreasing risk and return)
Gold Futures > e-Gold > Gold ETFs > Gold Mutual Funds
Please note, I do not consider gold under the consumption category for the risk-reward ratio.
No comments:
Post a Comment