Difference Between Digital Gold and Physical Gold

Difference Between Digital Gold and Physical Gold
Difference Between Digital Gold and Physical Gold

For decades, gold has been in high demand as an investment. Every auspicious occasion in India is celebrated with the buying of gold. Physical gold is utilized in a variety of ways, including jewelry, coinage, and even gold biscuits.

The digital revolution has exploded in popularity in recent years, affecting practically every sector, including gold. As a result, a new type of investment has emerged: digital gold. We’ll look at what digital gold is and try to figure out which investment is preferable by understanding the differences between digital gold and physical gold in this post.

What Motivates People to Invest in Gold?

Before we get into the meat of the essay, let’s take a look at why people invest in gold, or why gold is considered a secure investment.

Gold was once utilized as a form of investment currency. It was due to the long-term worth it possesses. In the past, people used to barter products for gold. Gold is also seen as a safe refuge for investors since its purchasing power has never dwindled. The asset is also known for providing high long-term returns. The price of gold has only risen throughout the years.

The price of gold has no relationship with the price of stocks on the stock market. This means that the price of gold is unaffected by stock market fluctuations. Gold is frequently used by investors as a hedging strategy to reduce the impact of rising inflation on their holdings.

The Advantages of Physical Gold :-

Physical gold is usually acquired directly from a jeweler by the consumer. This eliminates the need for any third-party or intermediary engagement. As a result, there is no risk of a counterparty. Physical possessions can also be used to secure loans. Furthermore, unlike any other physical asset, gold has no depreciation value. As a result, it is one of the most sought-after assets.

The people of India have traditionally prioritized leaving a legacy for future generations. For them, physical gold is the best option. It can readily be passed down down the generations.

What is Digital Gold, and how does it work?

Digital gold is an alternative to purchasing physical gold. In India, this is a relatively recent concept. People are converting to digital gold because of the advantages it provides.

To invest in digital gold, all you need is a smartphone and an Internet connection, and you may do so at any time and from anywhere. It’s similar to buying traditional gold, but with the convenience of a click of a button.

Digital gold is a digital form of pure gold that allows you to invest in it. In safe vaults, the vendor keeps a comparable amount of actual gold. The investor receives an invoice after completing the payment, and the acquired quantity appears under vault balance in their account with the service provider.

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How Can You Invest in Digital Gold?

In India, the concept of digital gold is relatively new. Currently, an investor’s alternatives for investing through an intermediary are restricted.

Some websites and apps, on the other hand, can be used to purchase digital gold. Augmont Limited, a joint venture between the state-owned Metals and Minerals Trading Corporation of India (MMTC), Produits Artistiques Métaux Précieux, Switzerland (PAMP), and Digital Gold India Pvt. Ltd., offers digital gold.

These companies have partnered with companies such as PayTM, Google Pay, Amazon Pay, and PhonePe to offer digital gold through their platforms. Jewelers such as Tanishq, Senco, and Kalyan Jewellers have recently begun to provide digital gold through similar partnerships. The investor can also open a digital gold account directly with the refiner or through one of the partner networks. A digital gold account is free of charge, save for the 3% GST.

Benefits of Digital Gold Investing :-

Let’s take a look at the advantages of buying digital gold. Small sums of money can be invested by the investor. The minimum purchasing requirements are unrestricted. If you’re looking for a way to make little investments, digital gold may be the way to go.

The digital gold assets are fully insured and stored in a secure vault. As a result, robbery is no longer a possibility. The condition and operation of vaults are overseen by a trustee. The vendor has responsibility for the gold.

Investing in digital gold has the potential to be both efficient and cost-effective. You won’t have to pay for additional storage or transportation because the transaction is done online.

Digital gold can be redeemed in a similar manner to how it was purchased. Physical gold coins or bars can be used for redemption. It’s great for investors who want the advantages of gold investment as well as the convenience of physical delivery.

Because the investments are made online, you can readily track them using online platforms (apps or websites). This makes it simple to evaluate your investment results. In addition, the investor benefits from the ability to buy or sell gold at a real-time price.

When buying gold, it’s critical to check the purity. When purchasing digital gold, investors will be purchasing 24-carat gold, and the quality is usually not affected. This alleviates the investor’s concerns regarding the gold’s purity and quality.

In conclusion :-

Both digital gold and physical gold have advantages and disadvantages. The investor’s choice of investment, on the other hand, is his or her own. The goal of the investment and the quantity of the investment are just two of the many considerations to consider before investing in either sort of gold.

It should be noted that no regulatory organization, such as the RBI or SEBI, has yet officially controlled digital gold. It is believed, however, that a decision will be made soon. A healthy investment portfolio of roughly 10%-20% gold, whether digital or physical, is considered healthy. You can now select the types of investments that suit your needs. Good luck with your investments!

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