How to Buy Digital Gold?
September 6, 2022

In India, the sales of digital gold are not a new concept. With increasing digital purchases, people are considering this option to a great extent. Over the years, gold has remained a common investment option. But today, just like most other industries, purchasing and holding gold as an investment has gone digital. Also, platforms like PayTM and Google Pay provide digital alternatives for gold purchases. Interestingly, purchasing digital gold has now become very popular due to these digital alternatives. Explore more about the facts about digital gold right below.

Benefits of Investing in Digital Gold

Investing in digital gold can bring a lot of benefits to investors apart from the benefits that usually accompany buying physical gold at a store. Check out the benefits of investing in digital gold right below:

  • You can get the gold at your doorstep physically
  • You can use digital gold as security for online loans
  • You can invest as little as Rs. 1
  • Your purchase is completely insured and stored safely
  • When buying Digital Gold, the purity is 999.9 for MMTC PAMP purchases and 24K 99.5% in the case of SafeGold
  • Digital gold can be exchanged for gold coins and bullion or physical jewellery


Various Methods of Buying Digital Gold

For those who want to buy gold solely for the purpose of investing, digital gold is becoming an option. Below given are the different methods of buying digital gold which you can avail of.

Gold ETFs

Exchange-traded funds are nothing but mutual funds whose shares can be purchased on stock exchanges. Many asset management companies (AMCs) have their own gold exchange-traded funds (ETFs), including SBI Gold ETF, Nippon Gold ETF, and AXIS Gold ETF. As a matter of fact, ETFs allow you to invest in gold in small amounts. This method is ideal for investors who want to keep gold in Demat format and buy it in small quantities. In the case of gold ETF, the gold purity is assured at 99.5%. This is quite suitable for investors such as students, who have limited funds and want to allocate some gold. Above all, investors can easily borrow money from different financial institutions using these ETFs as collateral.

Sovereign Gold Bonds (SGBs)

Sovereign Gold Bonds (SGBs) are issued on behalf of the government by the Reserve Bank of India (RBI). The bonds are not only tradable on stock exchanges but also provide a liquidity option. The investors can easily take loans on these SGBs and thereby eliminating the risk of storing physical gold and allowing them to earn interest on the gold that would have otherwise been sitting in lockers. The investor will continue to receive interest on SGBs even after taking out a loan, lowering the effective interest rate of the loan. One of the best things about SGB is that they can be transferred or gifted.

Digital Gold Wallets

Many businesses have recently introduced gold wallets. The companies that give their customers access to this feature include GPay, PhonePe, and Paytm. One can use these products to download mobile applications and invest as little as INR 1 through various online fund transfer services in the gold wallet. This is quite similar to purchasing one rupee worth of gold. These businesses keep this gold in the MMTC-PAMP lockers. Using these mobile applications, gold can be sold and purchased at any time and from any location with a predetermined level of purity.

Multi Commodity Exchange (MCX)

Multi Commodity Exchange (MCX) provides a platform to trade in a variety of commodities such as gold, copper, silver, etc. This platform is used by traders to trade commodities via options and futures. You can trade the gold in different quantitative options including 1 gram, 8 grams, 100 grams, and 1 kg units. Traders can also make use of the platform to hedge their positions in a variety of commodities including gold.

Gold as an Asset Class

Since human civilization first developed the idea of wealth creation, gold has continued to be the most valuable asset in our lives. Our nation is the second-largest gold consumer in the world, and Indians have a strong attachment to gold as they see it as a necessary component of auspicious occasions.

Millions of Indians consider gold to be a form of security as well as an asset class. Thus, despite not being the world leader in gold mining, the nation has accumulated tonnes of valuable yellow over the years. Since then, it held roughly 10% of the world’s above-surface gold stocks and represented close to one-third of global gold demand.

Investors usually make use of gold in their portfolios in order to aid preserve wealth with a liquid asset that might assist in steering risk during geopolitical stress, market corrections, or persistent dollar weakness. In addition, it can also fulfill a long-term strategic role as evidenced by the fact that it has served as a core diversifying asset throughout a number of business cycles. With its broad advantages that may support strategic investment efforts throughout various business cycles, gold has the potential to improve portfolio construction strategies on a number of fronts. Primary advantages include:

  • Capital Appreciation
  • Risk Management
  • Wealth Preservation


As an Investment, Liquidity Constraints

Indians often invest in gold, but a lot of people usually do not understand why gold is not the only good investment. Gold has failed to provide investors with good returns in recent years or may even have provided them with negative returns. Also, every investment carries some risk, but gold has not really demonstrated why it is a good option. Undoubtedly, it does produce returns, as was seen when investors sold their shares of Lehman Brothers to buy gold during the financial crisis.

Investors usually turn to gold when there is uncertainty in the global business sector. However, they do dump it as soon as the economy starts to improve, and this can be seen in the current circumstances as well. These are the exact circumstances that are in place right now. Depending on their needs, a person can invest in gold. The demand for and changes in the global bullion market, however, affect the price of the yellow metal.

Final Thoughts

Gold investment is a familiar investment option for Indians. Be it wedding, anniversary, birthday, gold is a common element. However, if we look at gold as wealth investment rather than emotional attachment, there are several better ways to invest in gold than making jwellery. Hope this blog have enabled you to explore different avenues of gold investment to make an informed decision.

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