Digital Gold investment

 Digital Gold: How it works, where to buy, benefits and disadvantages

Once you invest in digital gold, the companies purchase an equivalent amount of physical gold and store it under your name in secured vaults.

Today Gold is no longer used as currency but it can still be used as money. In fact, Gold has been a store of value for over 3000 years. Much longer than any currency anywhere. In India, Gold is believed to be “God’s Money” and is offered to holy temples on almost all auspicious occasions. This makes India the largest importer of Gold in the world today. Despite being in the midst of a global pandemic, Indians have found a new way to invest in the yellow metal – Digital Gold.

As people are hesitant to visit jewellery stores and gold dealers, being able to procure gold online has come as a perfect solution to many investors. One Digital Gold trader, Augmont Gold Ltd. saw its businesses increase by 40-50% during the lockdown period.

So before we dive into what Digital Gold is, let’s do a quick rundown of how we have been investing in gold over the years:

Ways to Invest in Gold?

Well historically the most common way to invest in Gold has been to buy physical gold in the form of :

Coins

Bullion and

Jewellery

Apart from that, we have Sovereign Gold Bonds, Gold Mutual Funds and Gold ETFs to choose from.

But during a pandemic, another method of investing in Gold that has been gaining immense popularity is in the form of Digital Gold.

What is Digital Gold?

Buying physical gold certainly has its downsides. There are issues of identifying its legitimacy and purity, then there are problems of safekeeping and storage. One more issue is that we are in the midst of a pandemic. It is not quite ideal to go out to gold dealers or jewellery stores.

Digital gold Investment, on the other hand, can be bought online and is stored in insured vaults by the seller on behalf of the customer. It also helps us overcome all the aforementioned issues of physical gold purchases. All you require is Internet/mobile banking and you can invest in gold digitally anytime, anywhere.

How Does Digital Gold Work?

Digital gold is issued by the state-owned MMTC (Metals and Minerals Trading Corporation of India), which is associated with PAMP (Produits Artistiques Métaux Précieux), Switzerland, who is a global leader in branding bullion. By investing in digital gold, you purchase 24K 99.9% pure gold digitally. You can invest as low as Rs 100 in digital gold. Digital gold provides a transparent means to buy and sell gold digitally.

Investing in digital gold is similar to physical gold and the only exception is that you are not going to get the gold to possess physically. This offers you a clear advantage as you don’t have to worry about purity, storage, making charges, wastage, and liquidity.   

Why Should You Invest in Digital Gold?

You cannot directly invest in digital gold as you need an authorised third party. When you place an order for digital gold with your agent, they buy the corresponding amount of gold and place it in a vault on your behalf. Likewise, when you wish to sell your digital gold holdings, the agent will sell the gold at the prevailing market price and deposit the amount to your account. The process is entirely digital and safe. At no point, the investors are handed physical gold.   

Best Ways to Invest in Gold

Gold investment has long been a safe haven for investors during such testing times because of the opposite trajectory it follows to equities. However, for Indians, gold carries a much bigger value than just an investment opportunity; and when emotion comes into play, it becomes important to pay more heed to the commodity, the risks and benefits it carries. 

It becomes even more essential in the case of gold because gold can be treated in two ways: as an investment or for personal usage. The problem comes when Indians mix the two!

Gold can now be bought and invested in various forms: physical gold, digital gold, gold bonds, gold ETFs (exchange-traded funds) and more. Investing in gold online is a different ballgame. Let’s take a look at the various forms in which you can own gold, what suits you best as an investor and as a buyer.