Gold is a hot commodity in India – both literally and figuratively. For example, gold jewelry (wedding bands, bangles, etc.) or gold coins are either heavily invested in or given as presents during times of joy or celebration such as weddings. Gold bars and gold bullion are considered status symbols for many people throughout the nation. Everyone loves their gold and there is no wonder why -gold has long been known to be a stable option for investment purposes as it appreciates over time. Now… with that being said, instead of purchasing physical pieces of gold, investing in digital gold is becoming increasingly popular among savvy investors. This article covers the important distinction between these two forms (physical gold vs digital gold) of gold ownership.
What is Physical Gold Investment?
Gold has been used as the primary currency for over 5000 years and throughout this period, it has proven to be a very prestigious asset. Though gold is no longer used as currency in most countries, it remains a viable currency and, with that said, can be used as collateral to obtain a loan if needed. It’s also worth noting that in times of inflation, while currencies tend to lose their value over time, gold tends to hold its own – so if you find yourself unable to keep up with rising prices or interest rates on other investments, consider diversifying into gold or even using it as your primary investment strategy! Over the past 5 years alone gold has seen significant growth.
- Stable Positive Returns
The gold has risen steadily from Rs.4000 to Rs.50,000 per 10 grams despite all the corrections the market/economy has witnessed.
- Continuous Out-Performance Over Inflation
Unlike other investment options like FDs, Gold has shown a consistent track record of beating inflation.
- Diversify Your Risk in the Portfolio
It is said that you shouldn’t keep all your eggs in one basket. Similarly, you should diversify the places/mediums of storage like storing some gold digitally is a good idea!
- It is a Downside Protector of Equity Investments
There are 2 types of elements in this world, one is conductors which conduct all the electricity through them & the second one is an insulator which absorbs all the shocks & doesn’t let current shock you. Think of gold as an insulator that not only absorbs all the shocks but heals your losses by increasing its value when the equity markets fall.
- Easy Liquidation into Cash
Investment is for you but what’s the point of investing when you don’t have the amount you want at the time you need it the most. For example, you may have to take huge losses if there’s a blood bath in equities or huge penalties of bonds on the early redemption doesn’t sound good either. Gold can be a hero of these times & can save you a lot of money.
- Universally Accepted
As some of you might know, gold is the real currency & . Long story short – Gold is the real currency & everything else is just credit.
Cons of Investing in Physical Gold
- It is very difficult to store
- Risk of it being stolen
- Lose its value if damaged
- Risk of it being lost
- Purity issues
- Hassle to find the best price
- Difficult to track the invested amounts
- Can’t buy in micro quantities as Rs.1
- Hassle to find buyers at selling time
- Difficult to get perfect price on sale
What is Digital Gold Investment?
Investing in digital gold is considered to be an effective and efficient way of investing in gold. Each unit of digital gold is backed by 24k purity gold held in a secure vault in the investor’s name. One can buy digital gold with an amount as low as INR 1. The purchase and sale happen online at market prices, ensuring complete transparency and security to the transaction.
Investors don’t have to worry about storing their precious metals if they have them purchased online. The company will store the gold on your behalf until you decide to sell it and if so, they will quickly remove it from storage. When an investor decides to sell their commodity, the company will re-sell the gold for you. Investors don’t even have to take possession of the physical gold themselves; however, investors can choose between holding on to the investment and taking physical delivery.
Pros of Investing in Digital Gold
- Has all the thesis pointers of gold
- It can be delivered in physical form
- No extra taxes on digigold
- Trackable returns
- No risk of being stolen
- Lowest rate as no middlemen involved
- No risk of damage
- 24K purity assurance certificate
- No risk of it being lost
- Easy to gift
- Can buy as low as
- Easy to buy & sell on few clicks
- Can get the perfect price
Also Read: Pros & Cons of Investing in Gold
Cons of Investing in Digital Gold
Well, as such it is difficult to find antithesis pointers of digital gold as it covers all the limitations of the physical gold & offers much more convenience, but still, we found some pointers for you.
- To buy digital gold the platform should be trusted.
- The platform should offer you the 24K purity certificate.
- The platform you choose should let you Deliver or Sell.
One of the disadvantages of owning gold is the high investment cost, as well as its expensive storage fees. Investors who are interested in physical gold but cannot deal with these drawbacks may want to look into a more convenient alternative – digital gold. It’s similar to physical gold in its value and benefits, but digital gold can be purchased from an online platform that was created to serve investors around the world. Its low investment price point also makes it ideal for people who don’t want big investments from their funds. In addition, investors needn’t worry about having their funds tied up in a bank account, since all of the seller’s vaults are stored securely in places.