When I received my very first salary, my mother gave me timeless advice: “Buy gold.” Throughout my life, I have witnessed his passion for gold, whether for a wedding, a festival or any other special occasion. The tradition of buying gold ran deep in our family, but in my early 30s, marriage wasn’t part of my immediate plans. In fact, I had no plans to get married in the next few years. That’s when someone told me about investing in digital gold.
Over time, I watched my friends follow in our mothers’ footsteps. They invested in gold jewelry and rented safes in banks to protect their valuable assets. Seeing my friend buying even more gold jewelry for her future daughter made me wonder if we should question this trend.
I couldn’t help but question the wisdom of continuing this age-old practice, especially when it comes to investing. This was not the most practical approach to increasing one’s wealth.
The challenges of investing in gold jewelry became evident as I delved deeper into the subject with chartered accountant Abhay Asknani. “Resale value is a major concern. Gold jewelry often has manufacturing costs, which make up a substantial portion of the purchase price. When you decide to sell your gold jewelry, these manufacturing costs are deducted, thereby reducing the actual value you receive,’ Asknani said.
He adds: “Also, gold jewelry is not safe from wear and tear. Over time, it experiences “weight loss”, which does not refer to personal fitness but rather to the reduction in weight of the gold due to wear and tear. This further reduces the value when you decide to resell it.
Given these drawbacks, I decided to explore other investment avenues. After much reading on the Internet, I came across the world of digital or electronic gold. This represented a significant departure from the traditional path my family had followed for generations.
Digital gold: an innovative way to invest in the precious metal
Digital gold offers a modern alternative to traditional physical gold purchases. It allows individuals to purchase gold online, with the equivalent amount stored securely as physical gold in insured vaults. The minimum investment can be as low as one rupee, and customers have the option to sell their digital gold holdings, whether in full or in part, at prevailing market rates. All digital gold offerings are government certified, ensuring purity and minimizing the risk of fraud. All digital gold offerings are 24K guaranteed and government certified, ensuring purity and protection against potential fraudulent activity.
Asknani further claims that both physical gold and digital gold are good options depending on the investor’s requirements.
“Both physical gold and digital gold present viable choices based on the specific needs of the investor. Physical gold remains the preferred form for personal adornment, while digital gold emerges as the superior option for financial goals. If the primary objective is investing in gold, opting for digital gold proves advantageous over physical gold. Digital gold provides profitability, eliminates storage issues, and allows for effortless redemption. He adds.
It also highlights how Digital gold is unregulated but is safe as an RBI-regulated trustee backs the gold and the vaults are insured against theft and natural disasters.
“Digital gold implies that customers purchase gold digitally, and an equivalent amount is stored securely in insured vaults, guaranteeing the digital gold. This means that there is no price difference between physical and digital gold. Additionally, people who invest in digital gold do not have to worry about many other factors related to physical gold,” he adds.
Benefits of digital gold:
• Easy to buy: Buying digital gold is incredibly convenient. You can invest as little as Rs 10 with just a few clicks on an app, all from the comfort of your home. This accessibility allows for periodic micro-investments, helping you save over time.
• Purity: Digital gold is always pure 24K 999 gold and NABL BIS certified, ensuring consistent and guaranteed purity.
• Hassle-free liquidity: Digital gold investments have no lock-in period, allowing you to withdraw your digital gold in the form of cash or receive the equivalent amount of physical gold at your doorstep whenever you want.
• Secure storage: One of the most important benefits is the secure storage provided by digital gold providers. Your purchased gold is stored in insured safes, eliminating the need for a personal safe and worries of theft or loss.
• No lower investment limit: There is no minimum investment requirement. You can invest any amount you want, including as little as one rupee.
• Use as collateral: Digital gold can be used as collateral for loans. Its high purity and secure storage make it an attractive option for lenders and borrowers, simplifying the borrowing process.
• Ease of exchange: You can easily exchange digital gold for physical gold, coins or bars, anytime and from anywhere. This flexibility allows you to easily access your physical gold assets.
• Authenticity: Digital gold maintains 24K purity, giving buyers peace of mind of authenticity. The risk of fraud is significantly reduced, ensuring buyers receive the value they paid for.
However, it is essential to recognize the potential downsides associated with investments in digital gold:
Risks of digital gold:
• No regulatory body: Digital gold lacks regulatory oversight, making it vulnerable to unscrupulous practices. The absence of regulatory authority creates gray areas that could be exploited by dishonest players in the ecosystem.
• Storage time limit: Some platforms offering digital gold impose storage duration limits. After this period expires, individuals must either withdraw the gold or sell it.
• Upper investment limit: There is an upper limit to the amount you can invest in digital gold, which is currently capped at a maximum of 2 lakhs on most platforms. This may not be suitable for investors looking to make substantial investments.
Who sells electronic gold?
In India, three authorized entities offer investments in digital gold:
1. MMTC PAMP India Pvt. Ltd.
2. Augmont Goldtech Ltd.
3. Digital Gold India Pvt. (SafeGold)
These entities have the necessary licenses to offer digital gold investment options in the country, providing investors with a trusted platform to explore this innovative way of investing in gold.
We recommend consulting an expert before investing in digital gold.
