Safe investments are no longer limited to physical gold kept in lockers. Many people now prefer digital assets because they offer more flexibility, safety, and better control over their money. Let’s get into more detail on digital gold, its meaning, reasons you should consider it, where you can acquire it and some of its benefits.
What Exactly Is Digital Gold?
Digital gold is a form of gold investment where you buy and own real gold online. You can make this purchase without holding any physical assets. Your digital gold investment is stored safely in insured vaults by the service provider, and you are allowed to sell or convert it into physical gold anytime.
This purchase is backed gram-for-gram by the real gold stored within reserves. This completely differs from gold ETFs or mutual funds, which usually track gold prices but may not be 100% asset-backed.
Why Should You Consider Buying Digital Gold?
Below are a few reasons why buying digital gold has become increasingly popular in the modern day:
- Convenience: With a digital gold investment, you can buy, sell, or convert to jewellery instantly through your smartphone.
- Transparency: You can get access to real-time prices which are aligned with the current market rates.
- Purity: As your digital gold investment is backed by 24K gold, it ensures you get a 99.5% or higher purity.
- Storage-Free: Making this digital gold purchase does not require you to have access to a locker, as it is securely stored in a third-party vault.
- Liquidity: You are allowed to sell your digital gold at any time, even outside banking hours.
Who Sells Electronic Gold in India?
Currently, several platforms offer digital gold services in partnership with registered gold providers, including:
| Platform | Gold Provider | Features |
| Dhan | Augmont / MMTC-PAMP | Platforms, like Dhan, let you invest in digital gold and use other investment tools in one place. |
| Paytm | MMTC-PAMP | Includes access to UPI integration, instant redemption |
| PhonePe | SafeGold | It is a platform that is easy to use and offers loyalty rewards |
| Google Pay | MMTC-PAMP / SafeGold | This is a platform which is linked to bank accounts |
| Tanishq | MMTC-PAMP | Offers you access to jewellery redemption with discounts |
Benefits of Digital Gold
Digital gold offers a modern way to invest in gold without the hassles of physical storage or high entry costs.
- Safety: Your investment is stored in insured and audited vaults. You also receive 24/7 access to track your holdings online.
- No Making Charges: Unlike jewellery, there are no additional costs to having digital gold. This makes it more cost-effective for long-term savings.
- Flexible Denominations: You can invest from as low as ₹1 to lakhs, depending on the amount you are comfortable with. This flexibility allows you to invest as per your financial goals.
- Ease of Redemption: You can convert it to coins or jewellery and deliver it to your location. The redemption process is simple and can be done through a few clicks.
Risks with Digital Gold
Below are some of the risks involved when investing in digital gold:
- Regulatory Gaps: They are currently not directly regulated by SEBI or RBI.
- Short-Term Holding Caps: Most platforms offer digital gold cap holding periods of 5 years.
- Limited Tax Benefits: Digital gold is treated as physical gold under income tax laws.
- Price Spreads: The buy-sell prices may vary slightly due to platform margins.
Digital Gold Vs Physical Gold
Below is the comparison between digital gold vs physical gold, which you would keep at home or in a bank:
| Feature | Digital Gold | Physical Gold |
| Storage | This is vaulted and insured by a specific provider | It requires you to have a locker or personal storage |
| Minimum Investment | You can make a minimum investment of ₹1 | The minimum investment you can make generally starts from ₹5,000 or more |
| Liquidity | Has high liquidity, and you can sell it online at any time | Its liquidity is lower and requires you to make a physical exchange |
| Security | Has high security and ensures there is no physical possession risk | There are theft and loss risks involved |
| Extra Costs | There are platform fees, and GST is required | Requires you to pay for making charges and locker fees |
Who Should Invest in Digital Gold?
Digital gold is best suited for:
- First-time investors who are looking to enter the gold investment.
- Tech-savvy users who prefer app-based trading.
- For gifting purposes, especially during festivals like Akshaya Tritiya.
- Those who are saving up gradually for jewellery or wedding-related expenses.
Tips to Invest Wisely
While digital gold is convenient, making informed choices can help maximise returns and avoid pitfalls.
- Ensure you check for platform authenticity and provider tie-ups, including SafeGold, MMTC-PAMP, and Augmont.
- You should verify the purity certification and audit reports.
- Make sure you read the terms for redemption, especially if you plan to convert it to jewellery later.
- You should compare the prices and fees across different platforms to see which suits you best.
- Ensure you use trusted investment apps like Dhan that offer a broader portfolio view and low-cost trades.
The Smarter Way to Own Gold in the Digital Age
Digital gold is currently changing how Indians approach gold investment. It combines the time-tested appeal of gold with the incorporation of fintech platforms.
Digital gold is ideal for saving for a wedding or diversifying your portfolio, as it offers a modern and secure solution. The MadeForTrade community supports investors with insights and tips.
