NSE EGRs: Want to invest in gold without buying jewellery or coins? Check how to buy electronic gold receipts online

Indians have long considered gold a safe-haven investment, buying it in the form of jewellery, coins or bars. The yellow metal also holds cultural significance, with families purchasing it during weddings and festivals such as Dhanteras, Diwali and Akshaya Tritiya, as a symbol of good fortune.

However, buying physical gold comes with concerns such as purity, safety and storage. Electronic gold receipts (EGRs) offer an alternative, allowing investors to own gold without having to physically hold it.

The National Stock Exchange of India (NSE) launched EGRs as a new segment in May this year, with an intention to create a more transparent and efficient price discovery of the safe-haven metal.

What are EGRs and how do they work

Electronic gold receipts are digital certificates that show you own a certain amount of physical gold. The gold is safely stored in vaults approved by the Securities and Exchange Board of India (Sebi), while your ownership is held electronically in a demat account.

Investors can buy and sell them through the stock exchange, much like shares, and can also convert their holdings into physical gold. The entire process is designed to make gold trading easier and more transparent.

Benefits of investing EGRs

Since EGRs are traded on stock exchanges and held in demat accounts, investors can buy and sell gold without worrying about its physical storage and security. On its online portal, the NSE has outlined the following benefits:

• Unified pricing: EGRs support a standardised price for gold across India, following the principle of ‘one nation, one price’.
• Easy tradability: Just like shares, investors can buy and sell EGRs on recognised stock exchanges.
• Liquidity and assured gold quality: Investors can trade gold-backed receipts while the underlying gold is stored in approved vaults and meets prescribed quality standards.
• Fungibility: Gold of the same purity and denomination can be delivered interchangeably.
• Settlement guarantee: Exchange-based trading and settlement mechanisms provide investors with settlement assurance.
• Portfolio diversification: EGRs allow investors to add gold exposure to their investment portfolios, as it is considered a safe-haven asset.

How an investor can buy NSE EGRs?

Investors can buy EGRs through a Sebi-registered stockbroker that offers access to the segment. Here are the steps to follow:

Step 1: Choose a Sebi-registered broker with EGR access. Not all brokers offer EGR trading, so investors should first check whether their existing broker provides access to the EGR segment before proceeding.

Step 2: Log in to your trading platform, navigate to the gold exchange segment, select the denomination, such as 1g EGR or 10g EGR. Then check the live price and place an order just how you would do for any stock.

Step 3: EGR will be credited to your demat account on T+1 (the next business day) and traded during normal stock exchange hours.

A major advantage of investing in EGRs is that you can buy gold in small denominations, with units available for as little as 1 gram. Unlike jewellery, you do not have to commit to a higher minimum weight or pay making charges.

Investors also need not worry about the purity of the metal, as only gold meeting the standards set by the London Bullion Market Association (LBMA) and the Bureau of Indian Standards (BIS) can be converted into EGRs.