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The concept of digital gold involves digital investments done by individuals that help them buy, sell or hold gold in digital form. Investors can thus own fractions of actual, physical gold without having to actually store or manage the gold physically. These digital investments can be done via various online platforms and mobile applications. These investments or purchases are usually done in gram measurements. Think of digital gold as an alternative method to buying physical gold.
The minimum amount that you can invest in can be as low as one rupee and investors can sell the entire digital gold or a mere fraction of it anytime according to the market rates. The gold that investors purchase is all 24K and approved by the government thus there is no scope for fraud.
There are a ton of benefits that come with the purchase of digital gold. Here is a list of some of them:
Investors need not have to worry about the ‘hows’ and ‘wheres’ of gold storage when it comes to digital gold. The company that is offering the digital gold for investors to purchase will store the purchased gold in their secure vaults. As a result of this, the investor or buyer ends up saving on the locker charges and the stress that comes with possessing actual physical gold.
Another great thing about purchasing digital gold is that you can invest as little as one rupee. The physical equivalent of the amount of digital investment that you make will be securely saved by the company.
Investors can also use digital gold as collateral to avail loans. Because digital gold is 24k in nature and is stored securely, lenders are less likely to hesitate to provide a loan. As a result of this, the chances of the loan request getting rejected go down considerably.
How would you feel if the physical equivalent of your purchased digital gold was delivered to your doorstep with zero hassle? That is another advantage that digital gold holds. Your purchased digital gold can be exchanged anytime either physical gold, coins or bullion. It is that easy.
Any time that one decides to go and buy physical gold, especially in the form of jewelry, the chances of the jewelry being 24k in nature are very low. Thus you aren’t paying for a genuine product. Digital gold however is 24k and comes with 99.99% purity. This is true value for the money of any investor.
Having talked about what is digital gold and why it is a good investment, it's important to look at the other side of the (gold) coin as well. Here is a list of some of the risks that come with the purchase of digital gold:
The issue with investing in digital gold is that there is no regulatory body to monitor the rules and regulations regarding trading. This could lead to investors being exploited.
Sure you can store the physical equivalent of your digital gold in secure vaults, but a lot of the platforms that provide digital gold for purchase, also have a time limit set for how long they can hold your purchased gold. Once that time limit is crossed, investors need to withdraw or sell their gold.
Another downside to investing in digital gold is that on most platforms, the maximum investment limit for digital gold for buyers is 2 lakh. Not a great idea for anyone looking to make significant investments.
There are three companies or platforms in India that hold a license and help you invest in digital gold:
Digital gold is a great investment when you think about it, but like any investment, it is important to go into it after doing thorough research and getting to know all the pros and cons of the process.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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