Is investing in Digital gold a good option?
Are you thinking of buying digital gold? But not sure if digital gold is a good investment or not. We will help you.
As India embraces financial education and the desire to engage in different types of investments, the idea of investing in the digital version of a commodity that the country has been both physically and emotionally tied to is slowly beginning to take shape.
In India, physical gold is still the most popular traditional method of gold investment. Digital gold assets are currently being examined. We will discuss the options and how to invest in digital gold in this blog.
Advantages of digital gold
It allows you to keep gold digitally without ensuring a secure bank locker. Consequently, you will not have to worry about storage or security.
The custodian’s vaults have verified 24-carat, 99.99 percent pure gold, which is used for digital gold investments. Impurities are a common problem with physical gold. Purchasing actual gold also implies expensive manufacturing fees.
Except for 3% GST, a digital gold account is free. Since digital gold prices are the same throughout India, you may buy and sell gold digitally at completely transparent, real-time market rates.
Additionally, you are not subject to any deductions when selling your gold back to the platform online. If exchanged in this way, the majority of platforms offer the perk of inexpensive home delivery of the physical gold. Additionally, compared to genuine physical gold, digital gold enables purchases in far smaller amounts.
Additional read: Benefits of digital gold
Disadvantages of digital gold
Ah, to feel as though you were wrapped in gold! Something that digital gold would never provide you. In countries like India, acquiring gold is an obsession.
Therefore, digital gold might not resonate with all demographics. However, only some hold that opinion, which is a blessing.
Some people view gold as a pure investment, and when given a choice, they choose digital gold since it is quick and secure.
Steps to buying Digital gold
- A Demat account that is connected to a bank account and PAN card is required for investors.
- Consumers can purchase specific gold goods via reputable stock exchanges after opening a Demat account, or they may do so straight through a mutual fund for gold ETFs and the RBI-announced SGB (Sovereign Gold Bond) series for SGBs.
- Consumers have two options for selling their gold digitally: either they can hold it till maturation and then release it, or they may sell it on the secondary market, or stock exchanges.
- Additionally, a few businesses give customers the possibility to buy digital gold starting at INR 1.
- Know-your-customer (KYC) documentation must be accurate and checked prior to purchase. E-KYC and video KYC are two available Demat KYC modes that streamline and hasten the procedure of creating an account to purchase gold digitally. Generally, KYC includes the person’s PAN and Aadhar Card information.
Additional read: Physical gold vs Digital gold
Risk related to digital gold
- The main risk associated with every investment is that it will often lose value, which will lead to slower growth. That risk applies to digital gold purchases as well
- In the case of digital gold, India still lacks a well-established regulatory structure to control metal transactions. It’s necessary to think about this possible risk. Investors must conduct due diligence on the honesty and business model of the provider of digital gold until the government announces the required regulations to control the buying and selling of digital gold.
- Any online payment is at significant risk from cyber-attacks. This also applies to purchasing the commodity in digital form.
- To prevent any hazards, it is important to assess the reliability and standing of the somersaulting company where the gold is kept as well as the sufficiency of insurance if administrators are chosen by digital gold-providing firms.
- Another ambiguity is hidden fees. Check any or all charges associated with the product before investing. If not, they will have a negative impact on the investment’s overall results.
The Indian federal government made it clear in the Plan for FY 21-22 that the markets regulator SEBI will serve as the supervisor for gold markets.
This action is anticipated to increase confidence across the board in the commodities market, especially among retail gold buyers and gold traders.
With SEBI functioning as the regulator, the procedure of buying and selling gold is being simplified, like how shares are now dematerialized. This has led to a simpler delivery of the gold product in one trading day plus two more days, or T+2 days.
Investors must be smarter with money and receptive to novel investment products for the idea of purchasing and selling digital gold to become more widely accepted.
Is digital gold better than gold?
There is no difference in price between physical gold and digital gold. Additionally, a person dealing in digital gold should not worry about storage since it is safely kept in free, guaranteed vaults.
Who is buying digital gold?
MMTC PAMP, Augment Goldtech, and Digital Gold India are the 3 best-known companies offering digital gold in India (Safe Gold) in partnerships with several financial service providers, including Paytm, Google Pay, Amazon Pay, and Phone Pe, among others, these businesses sell digital gold.
Can I get profit from digital gold?
Virtual gold is a profitable investment choice despite some downsides, such as investment caps and a lack of a governing organization. It supplies adaptability, purity, and the right financial worth.
Consult an expert advisor to get the right plan