The Buyt Desk
Buying Digital Gold is as good as buying Physical Gold but much easier and quicker. There are many benefits of digital gold but let us understand a few facts.
Indians are fond of gold both in the form of wearable and investment (coins and biscuits). And buying gold was not an easy task. Now that digital gold is in the market, buying and selling gold has become a cakewalk. Now, one can buy the most loved metal online in just a few clicks and similarly sell it too. Digital gold can be brought for any amount even as small as Rs 100 and also need not worry about storing the gold and its safety. You can buy the digital gold yourself without the help of a broker, or agent and also you don’t need a Demat account. If not physical gold, digital gold, gold exchange-traded funds (ETFs) and sovereign gold bonds are the options.
What is Digital gold?
Digital gold is also physical gold which is bought online but stored in a secured vault with the seller on the customer’s behalf. An equivalent weight of physical gold is parked in the secure vault. It can be easily brought on many digital platforms. Digital gold is a good option for risk-averse millennials and young investors as they will hold the gold virtually. This is a perfect platform to park one’s money in a versatile and liquid gold investment without owning a safe or bank locker.
Where to buy Digital Gold?
Many payment wallets and financial service provider apps sell digital gold. Investors can buy gold in small amounts or can incrementally build gold holdings. Later digital gold can be sold or converted to physical gold in the form of coins and ingots.
What you should know before buying Digital Gold?
Investment in the yellow metal has always been profitable and encouraged in our society. So has digital gold lived up to its promise. It is the rebirth of conventional physical gold and is considered a strategic investment asset. Below are a few things you should know before investing in digital gold –
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Quality assurance – Always do due diligence before investing in digital gold. Confirm the quality of the physical gold that you are buying. Check with your seller about the gold purity and get the certificate of gold purity. There are exclusive 24k gold sellers which is the highest purity of gold.
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No limit to buy – There is no limit on the quantity of digital gold that can be purchased. Even digital gold worth Rs 100 can be brought and there is no upper limit established. Just like gold purchases from any offline stores, for purchases above Rs 1.5 lakh these platforms ask for additional know your customer (KYC) details.
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Know the price spread – In such platforms, a higher price is charged for gold buyers than the price offered to gold sellers. This difference in the price of selling and buying is known as the spread. For digital gold, this difference is usually 2-3%. This includes credit card or bank payment charges of 1-2%. Also 3% GST is levied on gold purchases and this is a loss when non-GST registered customers sell it back.
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Tax invoice – There are many online sellers and platforms that deal with digital gold. Not all platforms are direct sellers but conduits between buyer and seller. PhonePe, PayTM and Amazon are a few such platforms. SafeGold, MMTC-PAMP India, and Augmont are direct digital gold sellers in India. Customers’ transactions of both buying and selling digital gold are reflected in their digital gold accounts. And through their digital gold account, one can download the invoice. Even the Seller emails the buyer a valid Tax Invoice.
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No central digital gold authority – There is no regulatory authority for the digital gold industry even after the rapid growth. So it is the investor’s responsibility to do the necessary due diligence before investing in digital gold. Recently SEBI has entered into bar stock brokers from selling digital gold. But structural guidelines are still awaited.
Summing up
If you are a new investor in digital gold, be mindful of the above 5 points. This should be good enough to embark on a profitable investment journey. Keep yourself updated on the latest developments in the digital gold industry. There may be new updates soon.
