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Before investing in Gold, one should carry out comparative study on Gold ETF and E-Gold. Both are the two best investment in Gold in India. There are very little differences among the two. Both these products score very heavily when compared with Gold coin, Gold funds, Gold fund of funds, Ornaments etc.... The choice is limited to these two. Between the two, one should do detailed study. Both of these products have their own merits and demerits. Differences are very little. Still we can point out a few. Now we are going to do the comparative study of Gold ETFs and E-gold.
| Parameters | E-Gold | Gold ETFs | |
| 1 | What is? | E-gold is the dematerialized electronic units of Gold | Gold units are units representing Gold in dematerialized or physical form |
| 2 | Who run it? | National Spot Exchange limited | Various mutual funds own Gold ETFs and are listed in stock markets |
| 3 | How many? | E-Gold only (No permutation) | 11 Gold ETFs run by 11 mutual funds |
| 4 | Where to buy? | From the online trading platform run by NSEL | From stock markets like NSE and BSE |
| 5 | Unit of purchase | 1 gm | 0.5 gm in Quantum gold ETF to 1gm in others |
| 6 | Physical delivery | as low as 8gm. 15 cities where you can take delivery | Mumbai only. Physical delivery of minimum of 1 kg. |
| 7 | Demat account | Separate demat account with NSEL | Same demat account used for stock markets |
| 8 | Wealth tax | yes | No |
| 9 | Long term capital gain tax | After one year | After 3 years |
| 10 | Short term capital gain tax | Before one year | Before 3 years |
| 11 | Liquidity | More or less same | More or less same when compared with leaders like GOLD BEES |
| 12 | VAT and Sales tax | No | No |
| 13 | Purity of Gold | 99.5 | 99.5 |
| 14 | Intra day trading | Yes | Yes |
| 15 | Trading session | 10.00 am to 11.30 pm | 9.00 am to 3.30 pm |
| 16 | Charges | 1) Rs.10 per lakh as turn over charge 2) 60 Paisa per unit of e-gold per month as storage charge 3) Brokerages. 4) Transaction charge of Rs.1 per gram 5) Almost nil recurring expense | 1) Brokerages 2) Annual recurring expense ranges from 1 to 2 % 3)Transaction charge of Rs.1 per gram |
| 17 | Price as on 17/03/2010 | 1700.80 | 1648.40 |
| 18 | Price as on 24/10/2011 | 2714.40 | 2584.80 |
| 19 | Return | 59.60% | 56.81% |
| 20 | Comparative price | Indian Gold price | International gold price |
| 21 | Impact cost | 10 to 20 paisa | Rs. 4 to 5 |
Upon comparing the two, we can find out that there are fewer differences among the two. E-gold scores over gold ETFs in trading hours and expenses. Whereas Gold ETFs has lot of choices and competition and selection for the investors to choose from. Although some Gold ETFs have less liquidity in the exchanges, investors have the option of 3 to 4 Gold ETFs which are having good volume in the stock exchanges. With e-Gold, liquidity is not at all a problem. Volume of e-gold is picking up fast. Tracking error is almost nil with E-gold. Whereas in gold ETFs tracking error and expense ratio and impact cost come into play. Lastly, e-Gold is better investment in Gold than gold ETF in respect of less expenses, no tracking error, less impact costs, more liquidity, extended trading hours. But these differences combined make to return percentage gap of 2 to 3% between e-gold and gold ETF. Above said are the reasons behind the increased return percentage for e-Gold when compared with Gold ETFs in India
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