From Love for Gold to Return on Gold: Advantages of investing in paper, digital gold

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Updated: Jul 23, 2020 6:37 PM

There are various options to invest in paper gold, viz. Gold ETF, Gold Mutual Funds, Sovereign Gold Bond and digital gold offered by MMTC-PAMP.

gold, gold investments, physical gold, gold jewellery, options to invest in paper gold, Gold ETF, Gold Mutual Funds, Sovereign Gold Bond, MMTC-PAMP digital goldTraditionally, Indians love to possess gold and there are hardly any special occasions when Indian women don’t display their gold ornaments.

Traditionally, Indians love to possess gold and there are hardly any special occasions when Indian women don’t display their gold ornaments. Be it religious functions or family functions – especially marriage, when women not only wear gold jewelleries, but gifting gold is a custom for close relatives of the bride and the groom.

However, with the spike in gold prices, increasing cost of holding physical gold due to risk of theft, robbery etc and availability of a number of easy ways to invest in paper/digital gold, the preferences of investing in gold are gradually changing from physical gold to digital gold.

There are various options to invest in paper gold, viz. Gold ETF, Gold Mutual Funds, Sovereign Gold Bond and digital gold offered by MMTC-PAMP, a joint venture between Metals and Minerals Trading Corporation (MMTC) of India and Produits Artistiques Métaux Précieux (PAMP SA) of Switzerland.

Following are some of the advantages of investing in digital gold over physical gold:

Cost of holding

Keeping physical gold at home has risks of theft, robbery, burglary etc. So, to keep the gold and gold items safe, the owner needs to pay rent to hire a locker and pay premium to insure the yellow metal. However, in case of investments in paper/digital gold, the risk and cost of storing gold shift from investor to issuer of paer/digital gold.

Regular Return

Not only does it save the cost of holding, but also provides regular returns – like interest on Sovereign Gold Bond.

Ease of Investment

Investors may hold digital gold in fraction – like the option to invest as low as Re 1 in MMTC-PAMP Digital Gold (999.9 purity certified gold). Moreover, investments may be done from the convenience of home through demat accounts and even through UPI Apps on smartphones.

Purity

There are risks of getting impure gold while buying in physical form. However, investors in paper/digital gold don’t have to worry as it’s the duty of the issuer of the paper/digital gold to ensure purity.

The liquidity and taxation aspects, however, vary from product to product in case of paper/digital gold.

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