As the National Stock Exchange of India commenced live trading in Electronic Gold Receipts (EGRs) on Monday, investors exploring this new form of gold ownership are likely to have several questions before deciding whether to invest in the yellow metal through the exchange platform.
Among the most important questions is whether EGRs are backed by physical gold. The answer is yes. Every EGR is backed by corresponding physical gold stored with SEBI-registered vault managers. Depositories coordinate the creation, holding, transfer and extinguishment of EGRs, while the vault managers and depositories reconcile the quantity of EGRs issued against the physical gold stored in vaults. Depositories also conduct inspections of the gold deposited with vault managers.
