People have been investing in gold for years and even today gold investments are equally popular. Even after many investment options have come up in the current market, the presence of gold investments remains.
The digital revolution has expanded a lot in the recent past, which has also had an impact on gold investment. Now gold has started to be available in physical as well as digital form.
Today we will talk about many important questions of digital gold such as what is digital gold, how it works and the advantages and disadvantages of digital gold. At the end of this article, we will talk about whether you should invest in digital gold or not.
What is Digital Gold?
If we talk in a very simple language, then digital gold is a way to invest in physical gold. Just like you buy gold from a store, you can buy digital gold from an online platform.
Online gold is stored by the seller for the customer himself. You can buy and sell even pure 24 carat gold of just ₹1.
Thus, buying digital gold is a virtual way by which you can buy gold and invest in it without any physical delivery. In this, the actual ownership remains with you, but as much gold as you have bought, the service provider keeps it safe for you in the vault.
How to buy Digital Gold1?
There are mainly three digital gold sellers in India.
- MMTC (Govt.)
- Safe Gold
These three companies buy gold and keep the gold of investors safe on behalf of their platform. With the help of the following platforms, you can buy e-gold –
- Phone Pe
- Google Pay
- Airtel Payment Bank
You can go to any of these platforms and buy digital gold and invest in it. In these, you can sell your gold immediately and sell it immediately.
Advantages and Disadvantages of Digital Gold
In this digital world, digital gold is moving beyond physical gold as an investment. But while choosing any investment plan, there should be proper information about its advantages and disadvantages so that you can take the best decision for yourself.
Benefits of Digital Gold
- No making charges – If you buy physical gold, you may have to pay a making charge of 10 to 15% but in digital gold you do not have to bear the actual delivery of gold. This saves you an additional cost of 10 to 15%.
- No minimum investment – No minimum investment is required in digital gold. You can also buy quality gold of just ₹1. In the same physical gold, you do not get any such facility.
- When you buy digital gold, you have no fear of theft, while in physical gold, there is always a risk of theft.
- Investors can take physical delivery of their digital gold whenever they want.
- Digital gold can be used as collateral in online loans.
- Investors can sell their gold investments at 24×7 market rates whenever they want.
- Gold provides diversification to your portfolio.
Drawbacks of Digital Gold
There may also be some disadvantages of investing in digital gold that you need to be mindful of.
- Absence of regulator – There are no regulators to oversee transactions of digital gold. Which makes it a bit risky. While SEBI for ETF Gold and RBI for Sovereign Gold bonds are the regulators. With no regulator, NSE has banned its members from selling digital gold, due to which platforms like Upstox, groww will no longer be able to offer digital gold services.
- Whenever you want to take delivery of your digital gold, you have to pay 3% GST which increases its cost.
- Holding Charges – Some digital partners also charge you charges for holding gold in the vault.
- Delivery and Making Charges – If you want to take delivery of your digital gold, you have to pay making charges and delivery charges. These are a huge disadvantage of digital gold.
- Set limit to hold – Another big disadvantage of investing in digital gold is that investors can’t hold it for an indefinite period. Most digital gold service providers have a fixed period of time to hold gold in digital form. After this period, either your digital gold will have to be sold or there will be a physical delivery of it.
Are there any lock-in periods in digital gold investments?
Digital gold investments do not have any lock-in period. Investors can sell their gold whenever they want without any penalty.
Are Digital Gold Investments Safe?
By the way, there are no regulatory authorities in Digital Gold. But still, these can be considered safe investments. The main reason for this is MMTC which is a government agency which is working in this field.
Whatever gold you buy remains secure in your wallet, which keeps the chances of fraud low.
But with no regulator, there must be some risk in it.
Should You Invest in Digital Gold?
The answer to this question may be different for all investors. If you have to invest gold and you want to buy it in physical form, then it will not make any sense at all. In this, you have to pay making charges, GST, dismalling charges, etc., which do not benefit you.
Now the other option is digital gold. In this, you do not have to pay charges like physical gold, but while taking delivery, you have to pay the making charges and GST.
Gold is considered to be a safe investment, due to this, its returns are also low. So if you are an investor who likes to take very little risk then you can invest in digital gold.
The fixed time to hold digital gold, the regulator’s indeterminacy and spread charges reduce its attractiveness.
So if you are an investor who is young and wants to invest for a long time, investing in digital gold cannot be considered a good option for them.
If you have to invest in gold, then you can invest in gold ETFs or sovereign gold bond schemes. These make more returns by removing all the shortcomings of digital gold.
Which apps are right to buy digital gold?
You can buy Digital Gold with any trusted app such as Paytm, Phone Pay, Google Pay, etc.
Are Digital Gold Investments Risky?
The biggest risk of digital gold is that it has no regulator. According to the rest of the returns, its additional costs increase its cost.
Are digital golds better than physical gold?
If you are buying gold just for investment, then digital gold is a good option.
Do you need to get a kyc done to buy digital gold?
You can invest in digital gold even without kyc.
Can I buy minor digital gold?
A minor or minor cannot buy gold online.
Can you invest in digital gold without a PAN card?
Most platforms offer the option of investing up to Rs 2 lakh without a PAN card. You need a PAN card to invest more than that.