Beginner’s Guide to Digital Gold Investment

Topics

Introduction

Everything’s digital today. We’ve got digital pets, digital money, digital banks, digital offices… and now, we’ve got digital gold. But why should you care? Well, digital gold could be the smartest investment decision you make! According to a survey by Axis My India, 65% of Indians invest some or all of their income, with gold being a popular investment option. Indeed, 53% of respondents preferred gold as an investment!

So there’s no doubt that gold is a good investment. But it’s not very convenient, is it? You have to visit the jeweller, check the options, purchase it for a huge amount, pay the making charges, store it in a bank locker… and after all this, you don’t know if the gold is pure! This is where digital gold comes in. But what exactly is digital gold? Let’s find out.

What is digital gold?

Put simply, digital gold is an online way to invest in actual gold. Digital gold can be purchased and saved just like physical gold. However, digital gold is purchased online and is kept by the seller, on behalf of the buyer, in safe vaults. Moreover, 24-karat digital gold can be purchased or sold for as little as INR 1.

How to invest in digital gold

To invest in digital gold, you need a PAN card and a Demat account that is connected to your bank account. A Demat account is used to save shares and stocks, and most banks can open one for you.
You can purchase digital gold via reputable stock exchanges after opening a Demat account.
Get the know-your-customer (KYC) documentation done. The seller will check it during your purchase. Typically, this process will require your PAN and Aadhar information. The entire procedure can be done online.
You have two options for selling your gold digitally: you can either redeem it after holding it till maturity or sell it on the stock exchange.

After you buy the gold online, the custodian carefully takes the precise amount of gold and stores it in a locked vault. This gold is put through several quality checks before entering the vault, so there’s no need to be concerned about its purity.

Is digital gold a good investment?

Let us look at the advantages of digital gold. This can help you decide if it is a good investment.

Storage

Investing in digital gold means no rent for bank lockers, insurance, or extra fixed deposit investments. According to the vendors, the digital gold is kept in a safe, insured vault without additional fees.

Convenience

You can purchase digital gold for as little as INR 1 and gradually increase the holding. Comparatively, the cost of investing in physical gold is high.

Uniform cost

Digital gold costs are the same throughout the country, while real gold costs differ from jeweller to jeweller and city to city. Moreover, digital gold carries a GST of 3% only, while physical gold has hefty charges.

Purity

Sellers emphasise that digital gold investments comprise 24-karat 99.9% pure gold. It costs more to check the purity of physical gold.

Redeem or sell

With the press of a button, you can easily purchase or redeem digital gold. It can be done at a 24-hour market-linked rate that will have the value of the gold instantly transferred to your bank account. If you decide to redeem it, the physical gold will be delivered right to your door.

Quick liquidity

Actual or physical gold can only be sold or exchanged through a physical jeweller. However, digital gold can be sold online quickly.

Collateral

If you are taking an online loan, you can pledge digital gold as a security or collateral.

Can digital gold be converted to physical gold?

The answer is yes! All you have to do is log in to your Demat account and choose the option to convert digital gold to physical. However, while you can buy digital gold for as low as INR 1, you need at least 1 gram of digital gold to convert it into physical gold. You may have to bear some charges for minting the amount into physical gold. Approve them and get them converted. It’s as simple as that!

Who should invest in digital gold?

The short answer is – everyone!

It’s a great investment if you want to save for a trip or a house. You can invest a little every month and build strong savings. When the price goes high, you can sell your gold for a tidy profit. You can also consider investing in digital gold if you are fond of gold but cannot afford the high investment or storage charges. In other words, you can make small investments in digital gold since no restrictions or minimum purchase amount applies. If you need the money or physical gold for some purpose, you can withdraw the money or redeem the gold for physical gold coins or bars.

Conclusion

Both digital and physical gold have their perks. However, you can buy gold digitally at comparatively lesser rates than physical gold. Further, your purchase remains securely stored in a vault certified by Government-recognised agencies. Hence, convenience and affordability are primary factors that make digital buying of gold better than physical buying. All said and done, regardless of how gold is bought – digitally or in physical form, it remains highly valued.