Digital Gold Investment

Table of contents

What is Meant by Digital Gold?

Gold is known as the king of metals as it is highly invested in and promises great returns. With the ever-evolving technology, physical gold has also evolved into digital gold. When an individual buys digital gold, they pay for it to be stored in a physical form at a secured vault provided by the seller. By investing in digital gold, the buyer finds freedom from the burden of actually storing the gold. A buyer can buy digital gold online as per the gold rate today and for a value as low as one rupee. Buyers are free to sell all or part of their gold at any time as per the gold price today. The government has certified that all of this gold is 24K. Digital gold investments ensure purity and take fraud out of the equation.

Types of Digital Gold

There are a number of ways through which an individual can buy digital gold online. The following forms exist for investing in digital gold.

Gold Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) have become a very convenient way to buy gold. ETFs that invest in gold are essentially funds that may be purchased and sold on stock exchanges like regular stocks. To start trading in gold ETFs, investors must buy at least one unit, equal to one gram of gold. 

Gold Mutual Funds

By acquiring shares in mutual funds, investors can increase the amount of gold in their portfolios. Some mutual funds base their holdings on the equities of foreign gold mining firms and other assets exposed to the gold market, such as gold ETFs. These mutual funds follow the price of gold as the value of their assets rises and falls.

Gold Futures Contracts

Gold futures are standardised contracts that trade on organised exchanges. A gold futures contract works because the investor commits to buy or sell a specific quantity of gold at an agreed price in the future. These gold futures contracts have to be honoured by investors by either purchase or sale in anticipation of a profit or loss.

Sovereign Gold Bonds (SGBs)

The Government of India offers sovereign gold bonds via the Reserve Bank of India. These bonds launched in 2015 aren’t the most popular among the Indian masses yet. However, they are considered lucrative, given their sustained return on investment.

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Benefits of Investing in Digital Gold

Investing in digital gold comes with various benefits that contribute to its appeal apart from the digital gold purchase online as per the gold rate today. The best digital gold investment comes with the following advantages.

Secure Storage

Since individuals buy digital gold online, it is stored online. The biggest benefit is that it can be easily stored without worrying about theft or loss. The platforms or companies through which investors make digital gold purchases are equipped with secure vaults, thus, eliminating the need for the owner to have a physical stash of gold.

Lack of Minimum Investment

There is no minimum investment amount; individuals can buy digital gold online for any amount. The sum that was invested will be returned to the person. Digital gold investment can also be acquired for one rupee.

Accepted as Collateral

Digital gold investments can be used as collateral for loans. Certain lenders accept it as collateral since it is 24K pure and kept in safe vaults. It lessens the danger of loan denial for borrowers and spares them from the hassles of collateral documentation.

Quickly Traded

Another advantage of investing is the ability to rapidly exchange digital gold for real gold, coins, and bullion at any time and from any location. This flexibility may be used by people who want to convert their digital gold investments into physical goods. 

Ensures Authenticity

The purity of digital gold investment is unquestionable and stands at a great percentage of 99.99% as the gold is 22K. This eliminates the concerns of the buyers or investors on purity and authenticity. Investors are ensured they get the value as per the gold rate today.

Things to consider while Investing in Digital Gold

There are certain things that a buyer must be aware of to buy digital gold online. The following actors can influence an individual’s decision to invest in digital gold.

• Individuals can buy digital gold online at the ongoing gold price today.
• Buyers must verify the quality of actual gold supporting their investment as part of their due diligence before carrying forwards with the digital gold purchase online.
• One of the best aspects of digital gold investment is that it can be purchased on a variety of internet platforms. However, remember that these platforms are not vendors of digital gold but intermediaries between the vendor and buyer.
• Customer transactions appear in their digital gold account, and the vendor gives the buyer a proper tax invoice via email or makes it possible to download it in the digital gold account.
• The spread is the difference between the purchasing and selling prices. This spread is often 2 to 3% for digital gold since it covers the 1% to 2% bank or card payment charges. The 3% GST on gold is lost when buyers sell it back because GST is not recoverable by end users but only by VAT-registered enterprises.
• Despite its rapid expansion, the digital gold investment lacks a governing body. This puts the burden on digital gold buyers to conduct their own research before investing in digital gold.

Disadvantages of Investing in Digital Gold

It isn’t always sunshine and rainbows. Where digital gold investments come with drooling benefits, drawbacks are also attached. The following disadvantages are faced by investors when they buy digital gold online.

No Regulatory Bodies

One of the primary disadvantages of investing in digital gold is the absence of regulatory agencies overseeing trade laws and regulations. As an outcome, it leaves many grey areas for unscrupulous individuals in the ecosystem to exploit.

Restrictions on Storage Time

Physical gold is kept in vaults that are secure and guaranteed. However, numerous sites offer such storage spaces for a limited time. After the specified time period has expired, the gold must be withdrawn or sold.

Limited Maximum Investment

There is an upper limit to the best digital gold investment. On most platforms, an investor can invest up to 2 lakhs. As a result, it is not an appealing alternative for those wishing to make large investments.

Goods and Services Tax

You cannot avoid the GST because there are no extra costs or fees for buying, storing, or selling digital gold. Digital gold purchase online attracts a 3% GST, meaning that if you buy gold valued at Rs. 1000, you will receive Rs. 970.

Making and Delivery Charges

When you order gold to be shipped to your home, it will arrive in the shape of coins or bars. This implies that the manufacturers must create the requested quantity of gold in the form of coins or bars at the gold rate today. As a result, there may be delivery charges as well as charges levied against you when you order the gold to be sent to your address.

How to buy Digital Gold Online?

The steps to buying digital gold online may differ from the platform you purchase from. However, the steps normally followed by a platform are mentioned below.

• Create a Demat account connected to your bank account and Permanent Account Number (PAN).
• Investors must have comprehensive and validated know-your-customer (KYC) documentation in order to open a Demat account. Typically, investors must submit PAN card or Aadhaar card details, which may be done through e-KYC and video KYC, making the process quick and straightforward. 
• Investors can invest in specific gold products directly through stock exchanges via mutual funds for Gold ETFs or RBI’s SGB series for SGB.
• Digital gold investments can be redeemed or sold on stock markets when they reach maturity.
• Digital gold purchases can be carried out for as little as Re. 1.

By following the steps, you can make a digital gold purchase online through Paytm, PhonePe, Tanishq, MMTC-PAMP, etc.

• Visit the platform you wish to buy digital gold from
• Setup your account with eKYC
• The next step will ask you to enter the amount of digital gold you wish to purchase
• Once you are satisfied with the amount, proceed to the payments section
• Make your payment via internet banking or wallet or cards. 
• Upon successful payment, your account will display the amount of digital gold investment.