Should You Invest In Digital Gold?

Should You Invest In Digital Gold?

People have been investing in gold for decades, and the trend is not going away anytime soon. However, there is a relatively new mode of investing in gold, and that is digital gold. Digital gold is a different mode of investing in gold. Unlike physical gold, digital gold is bought and sold through online channels. But, just like physical gold, for every gram of digital gold you purchase, an equivalent of 24K gold will be stored in an insured vault. In India, digital gold is exchanged by any of the three banks-Augmond, MMTC-PAMP or SafeGold.

Advantages of Digital Gold Investments:

One advantage of investing in digital gold compared to physical gold is that an investor can easily buy or sell gold online. You don’t need to travel to your jeweler; everything can be easily done from the comfort of your home. Investing in digital gold is as easy and convenient as buying clothes online and can be done through e-wallets and UPI IDs. With digital gold, there is no risk of safekeeping as well, which is usually stored in insured vaults by the provider. Unlike physical gold, which can only be purchased in multiples of 1 gm, there is also no minimum limit to buying digital gold; anyone can invest with as little as ₹1. Digital gold is undoubtedly a convenient mode to invest in gold for the modern customer with an option to get the actual gold delivered to home. These conveniences have struck a chord with millennials and Gen Zs, who are opting to invest in Digital Gold rather than buying traditional gold in the form of jewelry. It is important to note that several extra costs incur, like manufacturing and storage costs, by investing in physical gold in the form of jewelry.

Gold Investment

Risks of Digital Gold Investments:

Despite all the obvious advantages, a few risks are associated with investing in digital gold, as with other investments. One big risk is that digital gold is a relatively new form of investment and is therefore not properly regulated. As of now, no regulatory body is responsible for monitoring the digital gold industry, leaving many gray areas for exploitation. Another risk associated with digital gold investments is the limitations regarding how much and how long one can invest. An investor can have digital gold assets in vaults for up to five years, after which the customer has to pay storage charges. Also, an investor can only have up to 2 lakhs in digital gold investments as of now. In addition to these constraints, there are also additional charges like GST, STCG, or LTCG based on how long you plan to keep your digital gold stored. It is also important to note that digital gold cannot be stored indefinitely; it must be either sold online or ordered in the physical equivalent. However, there is also a limit to how much gold investment one can get psychically delivered. As a rule of thumb, it would be wise to invest in digital gold only if you want to invest in virtual assets and not look for it to get physically delivered home.

Eugene Cone

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