Today, India is the second largest consumer of gold in the world. Historically, women used to store up gold in times of financial crisis. With digital space on the rise in many aspects, gold has also become accessible digitally. Digital gold is the new trend in the market, and it comes with a ton of potential. But before buying digital gold, you should comprehensively understand this concept. Let’s jump in.
What is digital gold?
When you purchase digital gold online, the seller keeps an equivalent amount of gold as physical gold in an insurance vault. It is stored safely and is also 100% insured. The minimum amount you need to purchase digital gold is as low as ₹1. You can sell a fraction of it or entirely anytime you want at the prevailing market price. Also, they are all 24K gold or 99.99% pure and are certified by the government, so the chances of fraud are close to none.
Problems with traditional gold purchasing
The traditional way of buying physical gold is outdated and has many challenges. Some of them include the following.
- You need to invest a lot of money to buy gold jewellery, coins, or bars.
- Ensuring the safety of the purchased gold is often challenging.
- The quality of gold varies from authorised hallmarked gold to non-authorised gold. Thus, it makes you vulnerable to fraud. A jeweller might charge you the market rate of gold and give you a low-quality product.
Benefits of buying digital gold
There are many benefits to buying digital gold. It eradicates the problems arising from traditional gold purchasing and has many advantages. They are mentioned below.
Secure storage
One of the biggest worries of buying gold is securing it. Gold, a precious metal, can cause a lot of concern for the buyer. With digital gold, you do not have to lift a finger. After you buy it, the seller secures the equivalent amount of gold in high-security vaults. As a buyer, you may also save storage charges and do not need to worry about theft or misplacement.
No lower limit
Traditional ways of buying gold require a substantial amount of money, which can be costly. With digital gold, however, you can invest as little as ₹1. There is no lower investment limit for digital gold, making it easy for anyone to invest in this asset.
Use as collateral
Like traditional gold, digital gold can be used as collateral for loans because it is 24K pure and is stored in high-security vaults. Digital gold is changing the lending industry with many benefits for borrowers, such as less paperwork and less chance of rejection.
Ease of exchange
You can get real gold in exchange for your digital gold anytime and anywhere. It can be delivered to your doorstep whenever you want, making it even more convenient.
Genuineness
One major problem with traditional gold is determining its purity. The risk of fraud is much higher when buying conventional gold. Digital gold is 24K certified, which means it is 99.99% pure. Therefore, the chances of deception are close to none in digital gold. Purchasers are guaranteed to receive the value for which they have paid.
Disadvantages of purchasing digital gold
Although the benefits of digital gold are innumerable, there are a few drawbacks. These are as follows.
No regulatory body
There is a serious lack of regulatory bodies governing the rules and regulations of this trade. Consequently, there is room for many grey areas that can be a segway to exploitation.
Storage time limit
Although the equivalent amount of gold is stored in secure and insured vaults after the purchase, many sellers put a time limit on this storage. After the expiration of that said period, the buyer must either withdraw the gold or sell it.
Upper limit on investment
Though digital gold does not have a lower limit for purchase, it does have an upper limit. On most platforms, the buyer can only invest up to ₹2 lakh in digital gold. So, if you want to make a significant investment, digital gold has no avenue.
How to buy digital gold, and who sells it?
Currently, there are three companies offering digital gold in India, namely:
- Augmont Gold Ltd.
- MMTC-PAMP India Pvt. Ltd. (a joint venture between the state-owned MMTC Ltd. and the Swiss company MKS PAMP)
- Digital Gold India Pvt./ Ltd. with its brand SafeGold.
You can invest in digital gold through online mobile e-wallets such as Paytm, Google Pay and PhonePe. Brokers such as HDFC Securities and Motilal Oswal also offer digital gold for purchase.
Conclusion
With the rise of NFT and cryptocurrencies, the world is slowly moving from physical assets to digital ones, thanks to many benefits. Buying digital gold online is extremely safe as the gold is backed by an RBI-regulated trustee and the vaults in which it is stored are insured against theft and natural disasters. Digital gold is becoming a popular investment choice due to its flexibility, safety, and value for money. It has made gold accessible and within reach of everyone.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.