If you are interested in investing in precious metals, but are worried about safety, you could invest in e-series. What’s more, through e-series you could even invest in platinum as well as other precious metals.
e-Series products are unique commodity investment products from the National Spot Exchange (NSEL). By investing in e-series, you can hold commodities in demat form and take physical delivery when needed. Physical delivery is in the form of coins or bars of high purity (995 and above). The return from e-series is equal to that from the physical commodity.
To trade in e-series, you need to open a separate demat account, which involves a certain cost. However, it is far less than that of investing in these precious metals through other instruments. Says Sanvali Kaushik, chief products and strategy, Ace Derivatives and Commodity Exchange: “Absence of management cost and other recurring expenses make e-series better than exchange-traded funds (ETF) or physical commodities.” Says V.K. Vijayakumar, investment strategist, Geojit BNP Paribas Financial Services: “When you buy e-gold the charge is between 0.2 and 0.3 per cent.” The cost of investment through e-series is also low compared to buying coins from banks, post offices and jewellers. These sellers, normally, charge a premium of 5-10 per cent on the actual commodity price when selling coins. Moreover, the premium on coins and bars is higher in case of smaller denominations. Says Vijayakumar: “e-Series can be converted into physical commodity for quantities as small as 8g (for gold).”
The best part about investing in e-series is that you can convert your investments into jewellery, which you can get from jewellers empanelled with NSEL by paying making charges. e-Series has several other advantages too, such as transparent pricing, no storage charges and systematic investment plan (SIP) options. SIP is available on a daily, weekly and monthly basis.
But when investing in e-series, watch out for the falling liquidity in e-gold products. Says Naveen Mathur, associate director-commodities & currencies, Angel Broking: “Traded volumes for the e-gold series plunged around 16 per cent from 14,578,157g in January 2013 to 121,95,376g in February 2013.” Another issue with e-series is that only a few brokers offer online trading. Also, the trading terminal is complicated, which means you might need a broker to help you operate it. Several prominent brokerage firms including Karvy, Religare and Geojit, offer services for trading in e-series.
Now, the question is when should you buy e-series. Says Mathur: “Retail investors should adopt a wait and watch policy; buying at dips around `28,500-28,700 per 10g in gold and around `52,000-52,500 per kg in silver is advisable.” So, wait for the dips before you take the plunge.
kavya.balaji@outlookindia.com