I am Tania Jalil
Now we are in the middle of the festive season, 2021.
And eager gold buyers and spenders are once again looking to buy the yellow metal.
After fintech platforms, jewelers are also offering digital gold.
Should you buy gold through these paperless, digital forms of gold, should you prefer them?
The traditional physical way to buy gold?
In this week’s ET Wealth Edition, Sanket Dhanorkar lists 5 things you should know about
buy digital gold
What is digital gold?
It is a tool that allows you to invest in pure gold in digital form.
The seller stores the same amount of physical gold in secure safes.
After making the payment, the buyer receives an invoice and the said quantity appears at the bottom of the safe
Your account balance with the service provider.
Customers can sell this gold at any time at the live market rate, in rupees or grams.
They may also take possession of gold in physical form such as coins or jewellery, which have been adjusted
Any making charge and packaging cost.
There is no upper limit to buy digital gold.
However, the maximum limit for buying gold in a day is Rs 2 lakh.
Who is giving Digital Gold?
In India, digital gold is mainly sold by three entities – MMTC PAMP, Augmont Goldtech and Digital
Gold India (SafeGold).
These firms have tied up with service providers like PayTM, Google Pay, Amazon Pay and PhonePe.
To sell digital gold through its platform, among others.
Recently jewelers like Tanishq, Senco and Kalyan Jewelers have also started offering digital gold.
through similar alliances.
Customers can open Digital Gold accounts directly with the refiner or through any partner
Forum.
How is it better than buying physical gold?
It essentially provides the facility of holding gold without any safe or bank locker.
So you don’t have to worry about storage and security.
Digital gold is invested in certified 24 karat, 999.9 pure gold, kept in safes
Guardian.
Physical gold often faces issues of impurities.
In addition, buying physical gold incurs higher making charges.
A Digital Gold account comes at no cost other than 3% GST.
Digital gold price is the same across India, so you can buy and sell gold completely online
Transparent, live market rates.
You can sell your gold digitally back on the platform whenever you want, without facing any
deduction
Most platforms offer the benefit of door-to-door delivery of physical gold at a small cost, if
redeemed as such.
In addition, digital gold allows for purchases in much smaller denominations than actual physical gold.
How is it different from paper gold?
Most of the benefits of digital gold are also derived from other forms of gold such as non-physical gold.
ETFs and Gold Funds.
Where digital gold differs from other options is in the price.
Apart from a one-time levy of 3% GST, there is no charge on digital gold.
Gold ETFs and gold funds both attract a recurring annual fee of around 0.5-1%.
You do not need to have a demat account to buy digital gold, like in the case of gold ETFs.
Also, digital gold can be bought in very small amounts at a time.
Most of the platforms as well as jewelers like Tanishq and Kalyan Jewelers allow buyers to shop
Digital gold for as low as Rs.100.
Gold refiners also allow purchases at Re 1 or the equivalent of 0.1 gram.
Some platforms also allow you to transfer your gold balance to another account online.
Gold balance can only be transferred to the account on the same platform.
And it makes for a convenient gifting option.
How safe is it?
In fact, the entities selling digital gold act as custodians of your accumulated gold, whether you
Buy directly or through a partner platform.
A trustee is appointed to oversee the quality and operation of the vaults.
At no time does the ownership of your accumulated gold transfer to any partner service
provider or custodian.
Physical gold is stored in secure safes, which are fully insured against any event- due to loss.
Theft or damage caused by natural calamities.
However, customers do not have the option to see if it is actually backed by physical gold.
At present, digital gold does not come directly under the purview of any regulatory body.
So there is an element of risk because the rules are not yet in place to govern this new area.
With the increasing popularity of this product, the amount of gold stored in safes is also increasing rapidly.
However, SEBI is expected to introduce norms for digital gold soon.
It recently barred brokerage platforms from offering digital gold.
And on that note, that’s all for this week
Come back next week for more money knowledge