Digital Gold For Digital India
Investing in gold has been increasingly popular in recent years. This yellow metal has undoubtedly preserved its worth as one of the country's most sought-after investments. However, additional ways to invest in gold became available as technology advanced. Digital gold is one such asset class. In India, the notion is still relatively new.
What exactly is Digital Gold?
Digital gold is a digital method of investing in yellow metal. Digital gold, like actual gold, is purchased by investors and held online by sellers. The process is entirely online, and the investor is not required to visit a jeweller to purchase actual gold. Investors may buy or sell 24K Digital Gold for a minimum of 1 INR.
Digital Gold vs. Physical Gold:
Digital gold refers to 24k vault-stored digital versions of pure gold that investors can access via digital channels. In contrast, physical gold refers to physical yellow metals purchased for ornamental purposes and investment opportunities that investors must physically purchase and store in lockers or vaults. The primary advantage of digital gold over physical gold is that investors do not have to be concerned about its security after purchase. On the other hand, physical gold has substantial non-refundable expenses such as manufacturing fees, storage fees, and so on.
How does investing in Digital Gold work?
Following a purchase from an online vendor, the investor will have that specific quantity of digital gold attached to their account. The process is comparable to the offline method of acquiring gold and keeping it in lockers or vaults. The quantity of digital gold you purchase will be connected to you, so you won't have to worry about the safety of your investment.
Online firms like Paytm and Google Pay operate as intermediaries in these transactions. The trading businesses from whom you purchase digital gold will store it securely in their vaults for you to access later. Investors can sell some of their gold or add more digital gold to these lockers at any time. These trading organisations provide services 24 hours a day, seven days a week, so you may access your gold anytime you want. The whole goal of investing in digital gold is to obtain profits after a few years, just like you would with actual gold, but without having to worry about the security of your physical gold.
Pros and Cons of Digital Gold:
Pros
- The minimum amount to invest in Digital Gold is 1 INR
- Digital gold can be used as loan collateral
- Digital gold is securely kept and completely guaranteed
- Physical gold coins and jewellery can be exchanged for digital gold
Cons
- Most online platforms have a maximum investment limit of 2,00,000 INR on Digital Gold
- In the absence of official regulating authority such as the RBI or SEBI it can turn unregulated
- Delivery fees and manufacturing fees may apply
- Some trading companies offer limited digital storage periods
Note:
The NSE (National Stock Exchange) directed the exchanges to publish a circular to stockbrokers instructing them to halt selling Digital Gold after SEBI has raised some concerns. As a result, stockbrokers no longer provide Digital Gold to investors, yet investing and mobile wallet platforms operate.
