Gold has been an important investment avenue for Indians since time immemorial. Akshaya Tritiya, a much-celebrated festival of India, marks an age-old tradition of buying gold on this auspicious day. Every year on the occasion of Akshaya Tritiya, thousands of people rush to their nearest jewellery stores to buy gold and celebrate this festival. But with the world going through a pandemic and lockdown being imposed in various parts of the country, people’s lives have come to a standstill and so has this tradition. While traditionally physical gold buying is a part of this tradition but what most people don’t know is that they can now invest in Digital Gold. So, what exactly is Digital Gold and how does it work? Read on to find out.
Digital Gold essentially is a cost-efficient and safe investment option where people can purchase gold through the registered platforms and the exact quantity that they purchase is kept away in a safe vault. Every unit purchased digitally thus gets backed by 24k pure gold in this way. There are majorly 3 trading companies that offer Digital Gold which are Augmont Gold Ltd., Digital Gold India Pvt. Ltd. and MMTC-PAMP.
Now, you must be thinking about why to buy gold digitally when you can easily purchase gold jewellery online. Well, here’s why digital gold is a better investment option for you this Akshaya Tritiya: –
- First off, when buying digital gold you simply don’t have to pay for any making charges and you save quite a lot.
- You can invest in Digital Gold with an amount as low as INR 100. Yes, you heard that right! With digital gold, one can own gold digitally with an amount as small as INR 100.
- Keeping gold safely is one of the major challenges that people have to face when buying gold but with digital gold, this is a thing of the past as your gold is safe in a vault away from you!
- Online fraud while buying jewellery online is quite common but investing in digital gold saves you from the chances of being conned online as it involves trading on verified platforms and each unit is backed by 99.9% pure 24-carat
- One of the lesser-known advantages of Digital Gold is that loans can be taken against the Digital Gold that one purchases which makes it equivalent if not better than buying physical gold.
- The costs of holding, storage and carrying are much lesser than physical investment in gold.
- It is a good opportunity for people buying for an occasion and for investors who can broaden and diversify their portfolio by investing in Digital Gold.
- The added advantage is that you can buy it anytime anywhere without worrying about its storage or its purity.
The ease of buying is one major advantage of investing in digital gold. The process of investing in digital gold can be broken down into the following steps: –
- Register on any of the platforms that provide the option of investing in Digital Gold. Groww, Paytm, HDFC Securities and Motilal Oswal are some of the platforms that allow you to buy digital golds.
- Log into your account and purchase gold worth the amount you have decided to invest.
- The trading platforms then allow payment using various modes such as net banking, cards and UPI after completing KYC verification.
- Once you have purchased this gold digitally, an equivalent amount of gold is kept in the safety vault under your name with the trading company.
- Now, you can easily access your account to track your investment, gain insights into its performance and even sell the gold easily at a real-time price. This makes Digital Gold an even better option as the buying and selling happen online without involving physical gold or money.
- Investors can also opt for getting a physical certificate of their Digital Gold against a minimal delivery fee.
Viola! Now you own gold digitally and that too without having to worry about keeping it safe or verifying its purity.
Besides using trading platforms, people can also buy gold digitally using one of the following options available which are regulated by regulatory bodies like SEBI and RBI: –
- Sovereign Gold Bonds – As the name itself suggests, are gold bonds offered by the Reserve Bank of India on behalf of the Government. Like ordinary bonds, gold bonds are substitutes for physical gold and can be bought by paying the issue price in cash and redeemed against cash.
- Gold Mutual Funds – Gold mutual funds like normal mutual funds are investments made on stocks of gold and syndicates provided by Gold Exchange Traded Fund or Gold ETFs. Gold Mutual Funds are mainly used to protect investors from market shocks and collapse and is a highly lucrative option whose returns can exceed the actual invested amount by manifold.
The age of digitization has enabled us to do a lot be it having the world on the tip of our finger via the Internet or controlling any device imaginable using a remote enabled by the IoT and now buy gold digitally which has traditionally been possible only physically. Digital Gold is the best option out there for investors who are looking to buy gold and have an affinity for it but don’t want to bear high investment risks or costs. It is not only a cost-efficient option but also extremely safe and easy to use. So, this Akshaya Tritiya don’t just buy gold but make a smart investment and purchase digital gold.
By Mr Vineet Patawari
Co-founder & CEO of stock market analytics platform STOCKEDGE and financial market learning portal ELEARNMARKETS. He is a Chartered Accountant and IIM Indore Alumnus.
