Diversifying your investment portfolio with digital commodities and financial instruments can be an excellent strategy for a strong portfolio. In particular, investing in digital gold in India stands out as one of the most promising options.
Traditionally, gold has been a favored investment option for Indians. However, investing in physical forms such as gold coins, bars, or jewelry often demands a substantial investment. This is where digital gold comes in. It offers a much more feasible option. You can invest in digital gold through smaller, more manageable payments.
While purchasing physical gold in the form of jewelry remains the preferred choice for many Indians, India is taking steadfast steps to move towards investing in digital gold. In this article, we will talk about what is digital gold and how you can invest in digital gold.
Also read: Tips for Buying Gold Jewellery
What is Digital Gold?
Digital gold, like cryptocurrencies, Bitcoin, and Ethereum, has become popular as an alternative investment in recent years. Digital gold is a way of owning gold without needing to physically keep it secure. The seller holds it safely in a digital vault while the ownership stays with you.
Digital gold, a form of cryptocurrency, is a digital representation of physical gold. It operates on a blockchain platform, allowing investors to transact and hold gold digitally without any physical metal involved. It can be traded in real-time on various cryptocurrency exchanges, with its value typically mirroring that of physical gold.
Investors in digital gold enjoy the benefits of diversification and protection against inflation, akin to owning physical gold, but without the hassle of procurement, storage, and security associated with the physical form.
You can acquire digital gold through various online platforms and apps, starting with as little as one rupee. It’s worth noting that all digital gold is government-certified, ensuring its purity and authenticity. This eliminates any concerns about fraud or impurity.
Digital gold offers high liquidity. Buying or selling it is very easy, and you can do it at your convenience without any waiting periods. Moreover, if you wish to convert digital gold into physical form at any point, you can easily go to the sellers and ask them to do that. They can even deliver your gold coins or bars directly to your doorstep. Additionally, digital gold can serve as collateral for online loans.
Also read: Best Way to Invest in Gold
5 Ways of Investing in Digital Gold
After having a clear understanding of what is digital gold, you must know about the different ways of investing in digital gold in India. Here is the list of different ways you can follow to buy digital gold online in India:
1. Gold Exchange Traded Funds (ETFs)
These funds track the digital gold price today in India, providing exposure to the precious metals market without actual ownership. ETFs are traded on major stock exchanges like regular stocks and invest in physical gold or futures contracts. They offer the flexibility of buying and selling shares during market hours, making them a popular choice for investors seeking protection against inflation or market volatility. Well-known gold ETFs include iShares Gold Trust (IAU), SPDR Gold Shares (GLD), and Aberdeen Standard Physical Gold Shares ETF (SGOL). ETFs may offer lower costs and greater liquidity than gold investment options.
2. Gold Mutual Funds
If you want to buy digital gold online in India, gold mutual funds are a great option. These investment vehicles allow investors to purchase shares in a portfolio of gold-related assets, such as mining stocks, gold ETFs, and bullion. Experienced portfolio managers actively manage these funds to maximize profits while minimizing risks associated with gold investments. Individuals looking to diversify their portfolios or gain exposure to the gold market without physical ownership favor gold mutual funds greatly. Examples of well-known gold mutual funds include Tocqueville Gold Fund (TGLDX), VanEck International Investors Gold Fund (INIVX), and Fidelity Select Gold Portfolio (FSAGX).
3. Gold Futures Contracts
These financial derivatives allow investors to estimate the future price of gold apart from the digital gold price today in India. The contracts involve buying or selling a specific quantity of gold and are traded on regulated markets like the Chicago Mercantile Exchange (CME). Traders and investors often use them to diversify portfolios, safeguard themselves against inflation, and capitalize on market volatility. However, they also come with risks, including the potential for significant losses and margin calls. Only experienced investors with a high-risk tolerance should consider investing in gold futures contracts.
4. Buy Sovereign Gold Bonds
Issued by the RBI (Reserve Bank of India), these bonds allow investors to buy gold on paper. Therefore, they are one of the safest options to buy digital gold in India. You can buy them from approved banks or post offices during specific periods. They also offer a fixed interest rate of 2.5% annually. Investors can trade Sovereign Gold Bonds (SGBs) on stock markets like regular stocks.
5. Jewelers
Some of India’s most prominent and trustworthy jewelers, like Kalyan Jewellers, Tanishq, and PC Jewellers, also sell digital gold in India. These organizations have some tie-ups with platforms selling digital gold in India, where you can buy digital gold online in India.
Advantages and Disadvantages when You Buy Digital Gold in India
| Advantages | Disadvantages |
| Easy to access: Digital gold offers easy online buying, selling, and transferring options.
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Cybersecurity Concerns: Buying digital gold in India, comes with the risk of cyber threats like hacking or fraud. This can jeopardize the security of the investment.
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| Lower initial investment: Because of the high digital gold price today in India, people can not always buy physical gold. But with digital gold, you can start investing at a very low price.
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Price volatility: The prices for digital gold in India are prone to volatility and change frequently. |
| Low Transaction Expenses: When you buy digital gold in India for investment, you typically reduce your transaction costs. They are generally higher in physical gold.
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Lack of Regulatory Oversight: Digital Gold India operates without oversight from a regulatory body, potentially leading to uncertainties regarding its secure storage and authenticity.
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| Transparent prices: There is clear transparency when Digital Gold India from Digital Gold India Private Limited. They provide all the details about the market trends, which helps investors make an informed decision. | No physical ownership: Digital gold lacks physical ownership and security measures, which could concern certain investors unfamiliar with the depths of what is digital gold. |
Digital Gold and Taxation in India
Understanding the tax implications is crucial before investing in digital gold in India. The tax treatment of digital gold is similar to that of physical gold in India. No direct taxes are imposed if you hold digital gold for less than 36 months. However, if the ownership period exceeds 36 months, a 20% tax on returns, surcharges, and cess would apply. The duration of ownership of your digital gold determines the applicable taxes.
Debunking the Digital Gold Myths
- Digital Gold is Just a Certificate: This is a common misconception about digital gold investments. Every unit of digital gold you purchase online is securely stored in an insured vault affiliated with the seller. You can easily convert it into physical gold.
- Lengthy Documentation Process: It is easy to buy digital gold online in India. It is just like shopping online from any other regular platform. You only need a phone, bank account, or UPI and an active internet connection to buy digital gold online. Once you’ve carefully reviewed and chosen a portal to buy digital gold, you can make a payment and gain ownership of the digital gold.
Digital Gold Price Today in India
The price of gold varies daily. If you’re considering a purchase, simply type “digital gold price today in India” into the Google search box and conduct a search. You can also search for Digital Gold India Private Limited.
Factors Affecting Digital Gold Price Today in India
1. Inflation
Gold serves as a hedge against inflation, leading to increased demand and higher prices during high inflation periods.
2. Government Gold Reserves
Higher demand arises when central banks of large countries increase their gold reserves, causing prices to rise due to the reduced supply of digital gold in India.
3. Jewellery Market
Gold prices surge during peak wedding seasons and festivals like Diwali, driven by heightened consumer demand.
4. Interest Rates
Rising interest rates prompt more individuals to sell gold, increasing supply and lowering gold rates. Conversely, lower interest rates lead to greater demand and higher prices.
Conclusion
In conclusion, investing in digital gold is a convenient and accessible way for individuals looking to diversify their investment portfolio. With the ease of online transactions, secure storage, and purchasing flexibility, it has gained popularity in India’s investment landscape. However, it is essential to know what is digital gold in detail before purchasing digital gold in India.
What is Digital Gold – FAQs
What makes Investing in Digital Gold Attractive?
Ans: Investing in digital gold is attractive due to its accessibility, allowing transactions from home. Its affordability in smaller quantities makes it accessible to a broader range of investors. It’s a cost-effective option with lower transaction costs compared to physical gold. Transparency in prices and market trends empowers informed decisions. Additionally, it serves as a tool for diversification, spreading risks across assets for a more resilient portfolio.
Where can you buy digital gold online in India?
Ans: In India, you can buy digital gold through various online platforms like Paytm, PhonePe, and Google Pay, as well as on stockbrokers’ and trading platforms’ websites.
Who can buy digital gold in India?
Ans: Anyone legally eligible for financial transactions can invest in digital gold. This includes students with pocket money savings or individuals unable to afford physical gold due to its lump-sum requirement. Those saving for physical gold in the future can invest in digital gold and convert it when ready.
