Gold rush: Know how digital gold can be a smart buy

November 13, 2020 1:15 AM

Digital gold is offered by MMTC-PAMP, Safegold, AugmontGoldtech and Stock Holding Corp of India Ltd. It can also be bought via payment apps

Any resident or non-resident Indian can buy digital gold.Any resident or non-resident Indian can buy digital gold.

By Gautam Kumar

This Dhanteras, if you are planning to buy gold, you can opt for digital gold by buying it online and holding it in electronic form. Whenever an investor buys digital gold, it is backed by equivalent amounts of physical gold. In India, digital gold is offered by AugmontGoldtech, MMTC-PAMP, Safegold and Stock Holding Corporation of India Ltd. Nowadays, digital gold can also be bought via payment aggregator apps or stock brokers. They offer digital gold in association with the above mentioned players.

Why should one buy digital gold?
One can buy digital gold for as low as Rs 1. It also offers the flexibility of accumulating gold through SIP to build long-term wealth. If you hold physical gold, risk of theft always looms. It can be parked in bank lockers but comes with an additional cost. On the other hand investors don’t have to worry about security of digital gold as the physical gold, which digital gold is backed by, is secured in the vaults of providers and the onus of its security completely lies with them. However, as digital gold is backed by physical gold, some of the providers ask for storage charges but only if you hold it beyond a certain point of time. Some of them even offer free storage.

Digital gold providers appoint an independent trustee which ensures an equal amount of physical gold against the digital gold of mentioned quality is kept secured in the vaults at all points of time.

Who can buy it?
Any resident or non-resident Indian can buy digital gold. Buying is very convenient as KYC is required only if one buys over and above the threshold limit. Digital gold can be sold back to the providers and investors do not have to be dependent on market participants to sell their holdings. Hence, liquidity risk is not there. Investors can sell their entire holdings of digital gold or part thereof at any time.

Investors shouldn’t worry about purity as well as it is backed by 24-carat physical gold with either 99.99% or 99.95% fineness. Digital gold can also be converted into physical gold and delivered at your doorstep. One can even convert digital gold into jewellery at jewellers partnered with digital gold providers.

The writer is co-founder, pennywiseapp

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