Physical gold purchased online (digitally) and stored in a secure vault on behalf of the purchaser is known as “digital gold.” It’s widely available on a growing number of digital platforms, and it’s the ideal way for risk-averse millennials and young investors to deposit their money in a versatile and liquid gold investment.
The return of gold as a strategic investment asset has been aided by digital gold, which has lived up to its promise. But, in order to take advantage of its numerous benefits, here are five things that any investor should keep in mind before investing in digital gold.
A buyer should confirm the quality of actual gold supporting their investment as part of their due diligence before purchasing digital gold. Most digital gold providers only use 24K gold, which is independently verified to ensure the greatest purity.
One of the best things about digital gold is that it can be found on a variety of internet sites. However, it’s vital to understand that platforms like PhonePe, PayTM, and Amazon are merely intermediaries between the seller and the buyer, not sellers of digital gold. SafeGold, MMTC-PAMP India, Augmont, and others are currently selling digital gold in India. Customers’ buy and sell transactions are recorded in their digital gold account, and the seller emails or makes available for download a legal tax invoice to the buyer.
Digital gold can be purchased for as little as Rs.1. There are no firmly established upper limits, either, which is also noteworthy. Although similar to gold transactions conducted by any offline business or jeweller, digital gold platforms may have additional know your customer (KYC) requirements for purchases beyond Rs. 1.5 lakhs to Rs. 2 lakhs.
A widespread practise in the gold or similar trade is to charge buyers of gold a higher price than the price paid to sellers. The “spread” is the difference between the buying and selling price. This margin is typically 2 to 3 percent for digital gold because it covers the 1% to 2% bank/credit card transaction fees.
The digital gold business, despite its rapid expansion, lacks a governing authority. This puts the onus on digital gold buyers to conduct their own due research before purchasing. SEBI has only intervened so far to prevent stock brokers from selling digital gold. More structural standards are expected in the near future.
However, for any novice digital gold investor, remembering these five points will be sufficient to start a successful investment path. Aside from that, remain up to date on all the newest advancements in the realm of digital gold as they occur.
