Digital Gold vs Physical Gold: Which is a Better Investment?

Digital Gold vs Physical Gold

Digital Gold vs Physical Gold

Gold can be said as the king of all the metals available in the world. For many years gold has been widely used for making jewellery, gold bars, coins, and gold bars. Gold is not only used for jewellery purposes but also for construction of religious temples. Especially in India during ancient times gold was used for construction of temples also. As many of you must be aware of the famous Golden Temple located in Punjab. Apart from this gold is also offered to Indian deities on special occasions. Because Indian people consider Gold as an auspicious sacred metal. Therefore, any Indian tradition or festival is not completed without the use of gold jewellery in it. As gold is considered an auspicious metal people prefer to purchase at least a small token of gold on festivals like Dhanteras, GudiPadwa, Akshaya Tritiya, and so on as per individual’s traditions.

Previously people used to buy gold by visiting a jewellery shop. But now through online platforms buying gold is much more convenient. Sitting at home people can purchase digital gold through online sites and applications of the service provider. In this digital world everything is transitioning to the online mode.

Now we are at the start of the new year. People have various plans for the new year. Like what they have to do with an extra amount of money left with them. Some people plan to buy various luxurious things or they plan to invest their hard-earned money into profitable investments. In the market, there are a number of investment options available. Like people can invest in the stock market, property, mutual funds, and many more. But when it comes to investing in any of these options there is high risk involved in bearing loss sometimes. But gold is the only asset that does not lose value for many years due to its indestructible nature. And gold is metal which does not get destroyed or rusted no matter how old it is. Nowadays, in the era of digitization digital gold is available that cannot be destroyed or destructed by anyways.

What is Physical Gold?

Physical gold is bought in the form of jewellery, coins, bars, and biscuits. People traditionally believe in investing physical gold for many years. Physical gold is generally purchased for consumption purposes as well as an investment to the savings. For purchasing physical gold there is no involvement of intermediary person, buyer can directly buy gold from any jewellery shop. But for storing the physical gold safely, the buyer needs a personal safe or locker in the bank.

What is Digital Gold?

Digital gold is an instrument that allows you to invest in pure gold through a digital platform. It is just like the regular gold that is purchased online and stored in the insured vaults by the seller on the behalf of an investor. Here, the seller is a custodian of the investor’s digital gold. As digital gold is stored virtually the risk involved in getting gold stolen is very less. The investor can keep the track of his digital gold account through the service provider’s app.

Digital gold investment can be a better option because investors don’t need to own a safe or locker to preserve their valuables. Because digital gold is stored at vaults free of cost for five years. But in case the investor doesn’t sell or redeem their holding they have to pay a storage fee to the custodian after five years.However, digital gold doesn’t come with surety of return or interest on it. Buyer can either redeem accumulated gold in the form of coins, bars or jewellery. Or the buyer can sell it back to the seller at the prevailing market price. In digital gold you are owning the physical metal only but, in a virtual form.

According to the research there is a 150% increase in the amount of gold that is stored in digital vaults. Which indicates investing in digital gold is increasing popularly because of it’s secured benefits. 

What are the Challenges of Holding Gold in Physical Form?

For many years people have mostly believed in buying physical gold, because people think their precious jewellery will be safe at their home or locker. Second risk involved in physical gold is the loss in making, when you have gold in the jewellery form whenever you convert the gold into bars or back to jewellery there is a loss incurred in terms of gold as well as monetary loss in making a charge of the jewellery. These are the risks involved for holding gold in physical form.

When jewellery shops are open for 10-12 hours, physical gold can be bought and sold, that too paying making charge. Digital gold comes with ease of liquidity that is when you sell your physical gold it involves authenticity and most jewellers offer lower than the prevailing market price. Whereas, digital gold can be sold 24/7 and at real- time prices. This means you not only purchase gold hassle- free but you can sell it conveniently too.

Investing in physical gold requires more money in hand. Whereas, investing in digital gold is “affordable to all” because the starting price is Re. 1 only. So, gold can be purchased in extremely small quantities and at a low price. This makes digital gold much more convenient not only for investing but also to give as a gift to loved ones.

Benefits of Investing in Digital Gold

Investing in digital gold can give lots of benefits to the investors, which benefits are not available in purchasing physical gold. Investors can enjoy following benefits if he/she opts for investing in digital gold.

  1. No storage cost: Investing in digital gold has the best advantage that your gold can be stored virtually in secured vaults.
  2. Buy at market price:  When you are buying digital gold it is available at the live market prices which are the same across the country.
  3. Redeem as per your convenience: Gold stored in the form of jewellery not only costs charge of making but, it also costs storage expense.
  4. Safety and security: Digital gold is stored with utmost care by the seller. Here, the seller is the custodian of investors’ digital gold. Investors can also keep time to time track of their digital assets.

Investments in digital gold are made in certified 24 carat, 999.9 pure gold held in the custodian’s vaults. No making charges have to be paid while buying Digi Gold, apart from the 3% GST. Because the price of digital gold is the same all throughout India, you may buy and sell gold online at fully transparent, real-time market rates. Furthermore, unlike physical gold, digital gold may be purchased in much lower denominations.

Where to Buy Digital Gold in India?

Currently, digital gold is primarily sold by three entities in India and “AugmontGoldtechPvt. Ltd.” is one of them, which provides lowest rates to buy DigiGold. These firms have tied up with various service providers, fintech companies, E-wallets, stockbroking companies, etc to sell digital gold via their platforms. The investor can open a digital gold account with Augmont directly or through any of the partner platforms. Through these entities, you can invest in gold India hassle freely.

How to Redeem Digi Gold?

Once the investor has bought digital gold, there are four options of redemption.

  • Digi Gold can be redeemed by selling it at platform brought from and getting the cash.
  • Digi gold can also be redeemed in the form of physical gold. You can request delivery of the Gold in the form of coins, bars (as low as 0.1 gm) and they shall be delivered at your doorstep.
  • The customer can also request the delivery by selecting from a wide range of jewellery articles from Digi gold seller website by paying a nominal making and delivery fee.
  • The customer can also buy jewellery with the partnered jewellers of the Digi gold seller in their city in lieu to Digi Gold sales.

When to Buy Digital Gold?

Indians have always believed Gold as the most preferred option for investment. Especially by the people who are interested in buying gold, keep on investing time to time in small fractions. Few things need to be kept in mind when to invest in digital gold.

  1. Purchase gold whenever you can:  The price of gold does not depend on the market factors, but instead on the demand and supply of the yellow metal. As a result gold prices rise and fall, but you can attempt to purchase gold in small quantities if you have extra cash for investments.
  2. Keep checking gold prices: As mentioned above gold prices keep on fluctuating as per the demand and supply. So, if the market tendency is to sell more, then this can be the good time for investing in gold.
  3. Focus on long term trends: Gold is a metal that is mainly seen as a long-term investment. So, for investing in digital gold keep in mind the investment should be for the long term, rather than getting immediate returns.

Physical gold vs Digital Gold – Which one Can Be a Better Investment for the 2022 Year?

Any product or service has its pros and cons, similarly physical gold and digital gold also have some pros and cons. The decision of opting for which option completely lies with the investor. As the investor has to understand the investment objective and risk factor involved in both options. But if someone is looking to purchase gold just for investment, he/she can invest in digital gold. As mentioned earlier Digital gold offers the core benefit of hassle-free investment at low prices. As well as digital gold can be easily liquidated at the prevailing market rate without incurring a loss. Investing in digital gold can be the most preferred and affordable option.

About Aditi Singh 211 Articles
Aditi Singh is an independent content creator and money finance advisor for 5 years. She is recently added with Investment Pedia. Internet users are always welcome to put comments on her contributions.

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