Digital Gold Vs Physical Gold Gold has been a popular go-to asset for Indians for several decades now.And why not? It is perhaps one of the few assets that does not lose its value over time. However, this asset is mostly held in physical form - jewellery, bars, and coins - which gives rise to several challenges regarding storage and security.Accordingly, many investors have been looking for a better alternative and have managed to find an ideal match in digital gold. There is a lot of speculation among investors concerning whether digital gold can emerge as a better alternative. Of course, the answer to this question is subjective. Then again, it's suggested to take a close look at the difference in concept and approach towards physical and digital gold investment to gain a better idea.
What is physical gold? Physical gold is very liquid in comparison to all other forms of gold. Gold ETFs are purely for investment purposes. While physical gold is for both investment and consumption. In Gold ETFs (mutual funds) buying and selling is more transparent. At the same time, physical gold involves no counterparty risk. Gold has been a popular go-to asset for Indians for several decades now. And why not? It is perhaps one of the few assets that does not lose its value over time. However, this asset is mostly held in physical form - jewellery, bars, and coins - which gives rise to several challenges regarding storage and security. Accordingly, many investors have been looking for a better alternative and have managed to find an ideal match in digital gold. There is a lot of speculation among investors concerning whether digital gold can emerge as a better alternative. Of course, the answer to this question is subjective. Then again, it's
suggested to take a close look at the difference in concept and approach towards physical and digital gold investment to gain a better idea. On that note, let's dive straight into the fundamental differences between physical gold and digital gold to form an informed opinion. digital gold investment Since last year as Covid-19 pandemic hit, gold prices rallied to historic highs that encouraged more investors to invest in the precious metal. People who are not familiar with the different avenues of investment in gold gradually became interested in the same. So, if you are one of those looking to invest in the precious metal, you must be sure about the vast opportunities and options in the investment, and its benefits. Additionally, before going into the discussion of gold investment, an investor should always consider that what is the particular purpose behind it. If someone is looking for an ornament, then this is gold jewellery, but if someone is looking for more profit or return out of it - then digital gold is certainly a better option than gold coins or other physical gold options. Here is a discussion about what digital gold is, and should one choose it or not. What is Digital Gold and how is it different? Digital gold is nothing but a 24 carat 99.9% pure gold investment without the burden of storage. It is invested through online mode via internet banking or UPI transaction. The money is paid online and the seller provides a digital invoice of the aforesaid purchase within 5 minutes. When somebody purchases gold in digital form, the company will stock it in its facilities at secured vaults, which relieves the investor of any chance of theft. In the case of physical gold, if the investor is not buying hallmarked gold jewellery, there will be no certainty about the metal's purity. It will not be a problem for digital gold, as these are certified by government-licensed agencies. Advantages There are few other similar options where no storage costing is required like, Sovereign Gold Bond (SGB). So, where is digital gold different from them? One can invest in digital gold with a very minimum amount of money, which is unlikely for the precious metal. An investor can start buying with even Re. 1 here and can sell the unit/s at any time from anywhere. The investor can also sell the gold any time from the same platform. After the selling request is confirmed, the unit/s of gold will be debited from the account and the net sale value will be credited there within 4 hours. For physical gold, the investor will have to travel to jeweller, but digital gold provides the opportunity of hassle-free immediate liquidity. Additionally, in India, the RBI issues a certain timeline for buying SGB from the government, but in the case of digital gold, one can buy or sell it any time from anywhere via internet transaction. So, it has that additional benefit of convenient instant purchase or sale. What is physical gold? Physical gold is very liquid in comparison to all other forms of gold. Gold ETFs are purely for investment purposes. While physical gold is for both investment and consumption. In Gold ETFs (mutual funds) buying and selling is more transparent. At the same time, physical gold involves no counterparty risk. What is the difference between physical gold and digital gold?
Both gold mutual funds and gold ETFs are an excellent alternative to physical gold. However, they are not as efficient as digital gold is. This is because you have to pay expenses such as expense ratio and other relevant charges to the fund house. But in the case of digital gold, there are no such charges. What is the difference between physical gold and digital gold? Both gold mutual funds and gold ETFs are an excellent alternative to physical gold. However, they are not as efficient as digital gold is. This is because you have to pay expenses such as expense ratio and other relevant charges to the fund house. But in the case of digital gold, there are no such charges. Gold Investment Options in India: Which One is Best for you? Gold has been a symbol of wealth since ancient times and even in the Information Age has managed to maintain its relevance as an investment. In its physical form, currently, around 190,000 tonnes of Gold are available globally out of which 50% is in the form of jewelry. An additional 17% and 13% of global gold reserves are held by Central Banks around the world and used for various industrial purposes respectively. At present, the second most popular use of Gold worldwide that accounts for 20% of the world's physical Gold are investments. These are held by individuals in the form of investments such as Coins, Bars, or as underlying assets of Gold Exchange Traded Funds, Gold Mutual Funds, or Digital Gold. we will discuss the key Gold investment options currently available in India and compare them based on key criteria such as availability, risk, return, cost, liquidity, etc. But first, let's discuss why investing in gold is relevant in today's world. To invest in Gold you either opt for the physical form or the digital form. In its physical form, Gold as an investment can be held in the form of jewelry, coins, bars i.e. bullion, etc. There are, however, a few key limitations of investing in physical gold: Making/designing charges make purchase expensive Storage expenses are applicable due to security and insurance requirements Selling is inconvenient due to possible impurities and the requirement of origination and purity certificates To overcome the limitations of physical gold, you can opt for the digital route which includes investments such as Digital Gold, Gold ETFs, Gold Mutual Funds, and Sovereign Gold Bonds. The following is a short description of each of these investment options: Digital Gold: These can be purchased through various apps in denominations starting from 1 gram onwards. Gold ETFs: Gold Exchange Traded Funds are traded on stock exchanges just like shares and primarily feature Physical Gold and stocks of Gold mining/refining as the primary underlying assets. A Demat (Dematerialised) Account is mandatory for investing in Gold ETFs. Sovereign Gold Bonds: These bonds are periodically released by the Reserve Bank of India (RBI) and available for purchase through leading public and private sector banks. While these
bonds are guaranteed by the Government of India and pegged to the price of gold, they actually do not have physical gold as an underlying asset. Do keep in mind that while the performance of all the above examples of Gold as an investment is linked to the price of Gold, there are significant differences between them in terms of risk, returns, availability, liquidity, lock-in period, and taxation. Digital Gold Vs Physical Gold Gold has been a popular go-to asset for Indians for several decades now.And why not? It is perhaps one of the few assets that does not lose its value over time. However, this asset is mostly held in physical form - jewellery, bars, and coins - which gives rise to several challenges regarding storage and security.Accordingly, many investors have been looking for a better alternative and have managed to find an ideal match in digital gold. There is a lot of speculation among investors concerning whether digital gold can emerge as a better alternative. Of course, the answer to this question is subjective. Then again, it's suggested to take a close look at the difference in concept and approach towards physical and digital gold investment to gain a better idea. What is physical gold? Physical gold is very liquid in comparison to all other forms of gold. Gold ETFs are purely for investment purposes. While physical gold is for both investment and consumption. In Gold ETFs (mutual funds) buying and selling is more transparent. At the same time, physical gold involves no counterparty risk. Gold has been a popular go-to asset for Indians for several decades now. And why not? It is perhaps one of the few assets that does not lose its value over time. However, this asset is mostly held in physical form - jewellery, bars, and coins - which gives rise to several challenges regarding storage and security. Accordingly, many investors have been looking for a better alternative and have managed to find an ideal match in digital gold. There is a lot of speculation among investors concerning whether digital gold can emerge as a better alternative. Of course, the answer to this question is subjective. Then again, it's suggested to take a close look at the difference in concept and approach towards physical and digital gold investment to gain a better idea. On that note, let's dive straight into the fundamental differences between physical gold and digital gold to form an informed opinion. digital gold investment Since last year as Covid-19 pandemic hit, gold prices rallied to historic highs that encouraged more investors to invest in the precious metal. People who are not familiar with the different avenues of investment in gold gradually became interested in the same. So, if you are one of those looking to invest in the precious metal, you must be sure about the vast opportunities and options in the investment, and its benefits. Additionally, before going into the discussion of gold investment, an investor should always consider that what is the particular purpose behind it. If someone is looking for an ornament, then this is gold jewellery, but if someone is looking for more profit or return out of it - then digital gold is certainly a better option than gold coins or other physical gold options. Here is a discussion about what digital gold is, and should one choose it or not. What is Digital Gold and how is it different? Digital gold is nothing but a 24 carat 99.9% pure gold investment without the burden of storage. It is invested through online mode via internet
banking or UPI transaction. The money is paid online and the seller provides a digital invoice of the aforesaid purchase within 5 minutes. When somebody purchases gold in digital form, the company will stock it in its facilities at secured vaults, which relieves the investor of any chance of theft. In the case of physical gold, if the investor is not buying hallmarked gold jewellery, there will be no certainty about the metal's purity. It will not be a problem for digital gold, as these are certified by government-licensed agencies. Advantages There are few other similar options where no storage costing is required like, Sovereign Gold Bond (SGB). So, where is digital gold different from them? One can invest in digital gold with a very minimum amount of money, which is unlikely for the precious metal. An investor can start buying with even Re. 1 here and can sell the unit/s at any time from anywhere. The investor can also sell the gold any time from the same platform. After the selling request is confirmed, the unit/s of gold will be debited from the account and the net sale value will be credited there within 4 hours. For physical gold, the investor will have to travel to jeweller, but digital gold provides the opportunity of hassle-free immediate liquidity. Additionally, in India, the RBI issues a certain timeline for buying SGB from the government, but in the case of digital gold, one can buy or sell it any time from anywhere via internet transaction. So, it has that additional benefit of convenient instant purchase or sale.