Retail investors make believe for gold guineas

The contract maturing on July 31 recorded a 170 per cent jump in open interest in the last two weeks, indicating that small investors are keen to save for the future, especially in assets. Currently, the small gold coin contract is open for trade for July and August deliveries.

Available for trading in as small as one lot (a coin weighing 8 gm), open interest for the July contract jumped sharply to 8,304 lots yesterday as compared with 3,078 lots on May 23.

"Retail participants are either keen on playing on commexes for a long periodor opt for delivery at the expiry of the contract. Being a small-price contract, traders would prefer delivery to feel pride in owning gold," said Naveen Mathur, head - commodities, Angel Broking.

Most importantly, traders may be assured of the quality of the coins delivered through the exchange.

The gold guinea contract on the MCX would be attractive to investors for three basic factors: rate transparency, does not require high holding capacity and having the benefit of cashing in at any point of time, says Jigar Pandit, senior manager - commodities sales, Sharekhan.

Witnessing a daily turnover of between Rs 5-10 crore on this contract, the MCX has exempted vaulting or storage charges on guinea to be delivered via the platform until December 31.

Launched on Akshaya Tritiya, an auspicious day in the Hindu calendar, gold guinea is a comfortable trade option for retail investors.

Trading is simple, where the investor needs to pay just 4-5 per cent of the upfront margin. If the price comes down, he is required to pay less. If the price goes up, the investor earns profit, which will be directly credited to his DMAT account.

Gold guinea contracts will help supplement and complement the electronic spot trading platform, set for launch soon.

"It will make the spot market electronically-transparent, creating a common Indian market, similar to the European Union market," said Shyamal Gupta, head - institutional business, Kotal Commodities.

Meanwhile, retail participation is likely to grow if the mandatory sales tax issue for gold guinea delivery is resolved, said Pandit.

The exchange has been arranging a number of awareness programmes in urban, semi-urban and rural areas to educate the public about this trade.