Prices of gold have fallen leaving opportunities for buyers to purchase the metal at lower rates. Apart from physical gold, you can either invest in Gold ETF or in E-gold depending upon your goal and investment objective. Gold ETFs are mutual funds which invest in physical gold of 99.5% purity while E-Gold is an electronic method of buying the yellow metal offering blend of both the forms - physical as well as electronic. Take a quick look at the difference between the two.
Gold-ETF can be converted to yellow metal
E-Gold can be converted to physical form. The "rematerialization" of E-Gold to yellow metal can be done where the minimum quantity of converting is fixed at 8 grams. Gold-ETF can be converted to yellow metal only when it exceeds certain size of 500 g to 1 Kg.
Timings of trading differ
E-gold are traded in NSEL from 10 a.m to 11:30 p.m on weekdays whereas Gold ETFs are traded only till 3:30 pm. E-Gold also attracts wealth tax. Gold-ETFs are treated as Mutual Funds and hence do not attract wealth tax.
Tax treatment differs for both the instruments
For Gold ETFs 1 year is considered for Long Term Capital Gains while for E-Gold the period is 3 years.
E gold directly tracks gold prices
In Gold ETFs, investors track the Net Asset Value (NAV) which keeps changing with gold prices while in E-Gold investors directly track the gold prices.
Gold ETF does not require demat account
Investing in E-Gold requires a demat account. On the other hand, anyone can invest in Gold ETF without having a demat account.