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1. trnvestingffi ..............1:.::Tl:..1*lf.::lli$::!39:f:f:lT:1?*EEj .
Ise-goldbetterthangoldETF?
a
#
effi%wastheone-lear(August2olo-August2011)returndeliveredW e-gold.compared.with4O%for goV
ETFS-Whilethemorginaldwrence in returnscanbeattributedtothecost-efectivenessofe-gold,both
thesedvenuesproyideeaseofinyestingbyallowingpeopletoholdgoldin thedefiatfonn. Howel,4
eachproducthasi* prosand.cons-whilegoldETFisamoretdx-efricientmeansofinvestw e-gotd
offerstheoptionof phtsicaldeliveri. Thisisperhapsthereasonexperaremaindiyidedonwhichroute
makesforbetterin|estmmt,frndsoutShobhanachadha.Basedontheiropinionanddependingon
your indi|idual needs,frnd outwhetheryoushouwgofor e-goworgoldETF.
fore€pld is onlylcl5 p6be, asopposed to
a45 hgoldETFS.
NaveenMathur
Assdlab Director. Commodiljes Anoet Broking
Fgold
E goldwirs hanalidom againstgoldETF.
h India therural comnunityad the
middle-tolow-inconegxoupha€atenden-
cytotlocktogold.Forthetwical InaIanln-
vestor,e-goldismores'ltable asit provldes
pricer,goldEm onlyrllllors them.certain
gbldEITShavethefl€xibilityto investupto
10%ofthe rotalnetassetsln moneymrrket
lnsErlmentsandddscanIeadtoEacking
error.someETFcompani€ralsoinv€lt in
goldtutues andin abastetofgbld rnining
companies.Theeamingsofagoldmining,
companyhaynot rellecttheprice
movemertind4 $er€by r€ducingd'e
lrnpactofthe pricerlse.Asaresdt, dle
renrlnsftom ETFSmaynotbe slrnilarto
$ore from inveltinginphysicalgold.The
market-d$l'lg lsanothercrucialfactorthat
aninvestorshouldconsider.onecanFad€
ingoldEIFSodytil 3.30p.m.,whileego]d
canbetradeddI 11.30p.n., prolidingthe
inv€storsgr€at€r0exibilityandBtobalcue!
whileEadingingolddometicaly.
MukeshGuota
Goldtf
Theideabehindboththeoptionsisfte
same-bothe-goldandgoldE'rTsalmat
relievinginvestoNofthen'ony ofstoragE
andpudty, rDakinggoldlnvestrnentmore
iftites wealthta&where,asgoldETFS
don't.B€sldes,th€i,$torcbal,€togo
thlowhthe inconveitenc€ofopenjnga
separatedematactounttobeabletotrade
in egold, whileonedoesn'thavetodoso
forgoldSIFSasthed€nat acco$t for
slErescanbeusedfo.d|e ElTs asi€I.
ffi?::ffiff"#is",i*..*on.omadlylnterectedlngetdrgphysical
deuveryofgold ihen,e-goldistheideal
rnodeofinvesting.Hou,eve{,ift€stors also lU
needtokeepinmhdthatforphysicaldeltu {:;
ery,theywilhavetopayachar:FandvAT'i: -
atthemteofl% each.
CharutShah
GoldEfFlornow
Atpresent,lnvestingingoldihoughETfs
q'ouldbemoreprudentfor small
in!€stoE. while it'stlue thatinverdngln
e-goldb rela&€ly cost'efrective,it'! alsoa
newpmduct. Itwaslaunchedonlyin
March2olo an4 hence,shouldbegiven
mor€tirnetoevob€beforer€tailinvestors
IrF:gnth:odFr O
_:romd since2OOZare
x;'ii:;#i,ul,.Iar€backedbygDod i;+
fimd houses.The
averagedailyvolumes
aresignincantly
:hiSherin the€-gold
s€grn€nt,but ihtg
couldatsobedueto
theauthorh€dpartic!
bution ofhigh n€t
rord iddMduals as
thecolrunodity
somettne compaEd
AnianiSinha
Mana9ingDkecrq Nrrior.l sptrrErdiaigo
Fgold
Thebiggestadvantagethatinvestingin€€pld
hasov€rgpldE"tI isthatitinlolvEsno
nunagementcostsorotherrecuring
. ex?ense!.Sothe
r#r #.li'"51,:',Tffi'"
f&&t whohdearons'
sgE&-' invesEnenthorizon.
eWl-ffi$i#fty"E-eoldis paispergramanda
-i-,..-^ci brokeragefeeofo2
,-l:':"'--'
0.3%.Bothth€se
thcaeplann' h afoofsbrdE'rrs,but
ingaions- arernuchhigher.E€old
i:imrrr,,ist canbeconertedinto
'---- -----:.'-
Dhlsic"lsoldfor
[]e!ll1ne
ffiritie*assmala
oruy CnaISeS .8 srlwhileEold ETFS
_ljtvolv'edale offe!th€optionofphys-
icaldelb€rvbutonlv
rldllsacuc:l dsrkiroftrn.
ieeanirbtoln accunutatingsucha
elagefee. huSeamolultofgoldis
anrr-, +nacc not feasbleforsmal in'
:-"^*::.:' vestors.Besid6,thede
liwry cenresoftheNa_
ngneIIOI tiomtspotElchang€
soldETFs. relocated in15citie!,
rfiile EIFSha!€only
onedellsycefi rein Mumbai.
E-goldcanalsobe&€.dy coN€nediDto
jewelerythroughselKt,'eputedjewelers
dtatconfomwilhthepuityardtransparcn_
cfgrddeline..Theinv€storor yhrstopayfor
thelluld'|gdargEs. TlleNationalspot
echangealrnstobringal brandedjewelers
rdderits umbr€Iaofenpaneledjewelers
wi&in ayear-Theliquidltyinegoldisalso
lncreashgphenomenally,withdledrrr€nt
avelagedailytrDoverbeinS{2OO25O6ore
compar€dwith{rtzo cloreincaseofgold
mFs.r&uidityis ofuEnostimportancefora
retaillni'estorasitnalrcsbuyingandsellng
moreemci€ntbyreducingtheimpa.tcost
(whichisthebid-askspeao.Theimpactcos.
Unlrkein
tounder-
duetothe
encym
pnclng.
caneaslydosodroughplanned,montl y
orreeklyinvestmentine{otd. In thisman.
ner,hec.n alsoguardhisinvesdnent
againstpricevolatjlity.E-goldhasalsobeen
providingbetterreh.|rnsdlangoldETls.
Theprimary reasonforthediferendal ls
6atin thecaseofim€stingin goldEI Fs,
th€reisararuEofdErS€s,suchasmanagF
mellt ed addsoryfees,rn rkednganddis-
tribudon expens€s,custodianchargesand
otheroperationelexpenses,Theexp€ns€
Iatio ofgold EIls k around1%.Apanliom
$e dlarges,dacking€rror alsobrtngF
downtle retrrff ofgoldETlt alittle bit.
tackjng eror isaneasureofhow clo€elya
pordolio folows th€lndexagrlnstwtdchlt
i! bencbmarked.Agoldlnveltor aIU/aE
aimstoachiev€returnsln lne ['lth theoneg
provtdedbyphlsical gold.while e-gold
direcdyracks thedomestic,phlEicalgbld
tt tobeconsideredalong-termcapltalgain,
whilegDIdETFSne€dtobeheldfor only
overayear.Also,thelong-t€m capital
galnstaxfor goldETFslelevtedat1o%,
whil€thetaxts20%for e-gbld:E{Dld also
widl dlatln dl€ €ouitvmarkets.It isaiso
tnrerhatbetngltnkei to phrstcal,domesdc
O
gordpnces,egoro mmgaresue olrency
riskbetterthangoldETF!.Accordingto
f#::n".15TffiXTH$ffff9goldETFStsnotthe domesticprtceof a.:ff
physicalgDldbut thetondon Butlion
Mark€tAs6ociadon's(LBMA)soldpric€.
Thisprlceisintennsoftbe Usdotlarsald
hastobeexprclsedin domestlcorrency,
th€rebyallowingexchangeratefluctua-
donstoad!€rs€lyimpacttbegoldRTF
NAVS.Howe€r,not beinglink€d to LBMis
guidellnesalsohaslts.hav,backs.'Ite
purity ofegpld lsnot approvedby LBI{A
andtheretsnostandardb€nchma* h do-
mesdcgbldprlces.E-goldr' deffnltely
ovenaftegoldElTs aranlnvestmentroute
o!€r fie nerdtwo.threey€ars.Till then,
sdcktogoldETFS.
theoption of
deli€ringthe y€now
netal an4 henc€,
bridgesthegap
betweenusingitfor
tradjdonalaulpido !
rcasonsforbuying it.
UDrikein goldE'TFS,
whereprice! aremeas
simpletounderstmd
prlclng.A smdl
irn€stor,whowanEto
hlsdaughter's
w€ddingorafertival,
E-goldiscost-
effective,but
newproduct
tlmet5evoL
vebefore
retailinvest'
olsVenrure
intoit.
GoldETFS
areabetter
opiiontian
e golddue to
IaXtreat-
mentmeted
outto its
retums.
efrcientand
coN€nient, Howet€t
SoldETFSmakefor a
inveldngoption
codparedwlih e-gold
becaue ofthe
differenttaxtreatment
while th€shortterm
capitalgElnstaxfor
theInargtralrate(tax
slabs),tli€ t€Durefor
theapplicationofthis
ratediffers,Anlnves-
tor hastoholdegbld
for overthEe yearsfor