All You Need to Know About Investing in Digital Gold Online

Investing in Digital Gold Online
An individual who wants to invest in gold but can't afford the hefty investment or storage charges could invest in digital gold online. In other words, investors can invest tiny amounts of money in digital gold. There are no restrictions or purchasing minimums. Furthermore, investors do not need to worry about the gold being stored because it is safe in the seller's vaults.
When you buy digital gold online, the gold is also sold entirely online, with no need to store the asset physically. The platforms provide digital gold at real-time rates, so there are no price differences to worry about. As a result, individuals who like to make minor gold deposits from the comfort of their own homes can do so with digital gold. Additionally, investors can choose to cash out their investment or redeem it for genuine gold coins or bars.

What is the Procedure for Investing in Digital Gold?

Any e-wallet platform, such as Paytm, Google Pay, and PhonePe, can be used to invest in digital gold online. Digital gold can also be purchased from Bajajfinserv, HDFC Securities, and Motilal Oswal. These websites and businesses exist solely to serve as a platform for the trading firms SafeGold, MMTC-PAMP, and Augmont. These apps and websites just serve as a conduit between trading platforms and investors. When investors buy digital gold online on these platforms, the trading corporation deposits an equal amount of physical gold in the vault in the investor's name. As a result, all investors need to buy in gold on these platforms, and the trading organizations will handle the rest

How to Trade in Digital Gold Online?

Investing in digital gold is as easy as shopping on the internet. The steps below will guide you through the process on how to invest in digital gold online:

  • Go to any of the digital gold investment platforms. G-Pay, Amazon, Paytm, HDFC Securities, and other such companies are examples.
  • Go to the section labelled "Gold Vault" or "Gold Locker."
  • You can enter the amount in INR or grams. Gold can be purchased by weight or by a fixed value at the current market rate.
  • After completing the KYC process, customers can purchase gold using various payment methods (internet banking, card, or wallet).
  • The account is instantly updated, and it can be accessed at any time. The gold will be kept in a safe place.
  • Digital gold can be physically delivered to investors. They might order coins or bullion to be delivered to their doorstep. However, there is a shipping fee. Additionally, users can sell their gold digitally on the platform at any time.

Where can you Buy Digital Gold Online?

In India, just three companies sell gold online. Multiple platforms, on the other hand, make it easier to buy and trade digital gold. In India, the following companies provide digital gold:

  • Augmont Gold Ltd. is a company that produces gold.
  • MMTC-PAMP India Pvt. Ltd. is a private limited company based in India. It’s a joint venture between MKS PAMP, a Swiss enterprise, and MMTC Ltd., a state-owned company.
  • With its ‘SafeGold Brand,' Digital Gold India Private Ltd.

Advantages of Investing in Digital Gold

When you buy digital gold online, you can be benefitted as below:

Make Little Investments

Investors can invest tiny amounts in digital gold. There are no restrictions or purchasing minimums.

A Loan Secured by Digital Gold

Digital gold investors can use their holdings as collateral for loans.

Quality

Only 24K pure gold will be owned by premium investors, with no compromise on quality. As a result, they do not have to be concerned about safety or purity.

Safety

The digital gold assets are insured and carefully held in a secure vault. As a result, there is no need to be concerned about theft or loss. The seller bears responsibility for digital gold.

Redemption

Digital gold deposits can be quickly redeemed. Redeeming gold in the form of actual gold bars or coins is possible. You can even cash out your digital gold assets.

Keep Track of your Investments

Online platforms make it simple to keep track of one's finances (websites or apps). One can quickly analyze the performance of their investment and acquire more significant insights.

Rates in Real-Time

Gold is available for purchase on internet sites at real-time gold rates. As a result, the investor can profit from price fluctuations.

Diversification of your Portfolio

Digital gold is a superb hedging asset as well as a means to diversify an investment portfolio.

What are the Drawbacks of Investing in Digital Gold?

The drawbacks are as follows:

Investment Ceiling

On most sites, the maximum investment amount is limited to INR 2 lakhs.

Waiting Time

A maximum holding period is set by the trading businesses, after which the investor must sell the gold or convert it into physical gold. Various trading merchants set multiple restrictions. The maximum holding duration for MMTC-PAMP, for example, is five years.

Charges

Platforms that sell gold online impose a management fee of 2% to 3%, as well as storage and insurance charges. If you wish to convert digital gold to physical gold, you'll have to pay a fee based on the amount you want to convert.

There is No Passive Income

Digital gold does not generate a steady stream of income. In other words, only after selling gold will one receive a profit. Investors do not accept any interest.

There is No Regulatory Authority

The major disadvantage of buying gold on the internet is that there is no regulatory framework in place. These trading companies are not subject to the regulations of RBI and SEBI, which protect the interests of customers.

Gold from MMTC-PAMP

There are no storage fees when you buy digital gold online from MMTC-PAMP, and you can keep the gold for up to 5 years. You must conduct a transaction once every six months to avoid your account being deactivated. You must sell the gold or turn it into gold coins when the 5-year period has passed.

Safe Gold Offers the Following Gold

There are several fees that you must pay if you buy digital gold online from SafeGold. You have a maximum of 7 years to keep the gold.

For the first two years, there are no fees. If the amount of gold is less than 2 grams after two years, a monthly fee of 0.05 percent is paid. After each month, the payments are withdrawn from your gold balance.

What is Meant by Digital Gold?

Investors preferring physical gold have the option to invest in digital gold online. It is the most cost-effective and efficient approach to invest in gold. Augmont Enterprises Private Limited, the state-owned Metals and Minerals Trading Corporation of India (MMTC), Produits Artistiques Métaux Précieux, Switzerland (PAMP), and Digital Gold India Pvt. Ltd., which sells digital gold under the SafeGold brand, all operate in India. It’s a joint venture between PAMP and MMTC.

Every digital gold unit acquired by an investor is backed by 99.9% pure 24K gold. As a result, there is no need to be concerned about gold purity. Digital gold can be purchased for as little as Rs.100.Anyone from anywhere can invest in digital gold online and at any hour of the day through the online manner. The digital gold units are also sold online at the current gold market price.

When a person buys digital gold online, the custodian safely stores the gold in a secure vault. And then it's sold, and the exact amount of gold is taken from the vault. Furthermore, there is no need to be concerned about the purity of gold because it is subjected to various quality checks before being delivered to the vault.

When you buy digital gold online, you don't have to worry about extra storage or transportation charges. Furthermore, when purchasing gold jewellery, there is no need to be concerned about incurring expenses. The significant benefit is that one does not have to be concerned about the safety of the gold they have purchased. Furthermore, the transaction takes place at market pricing, ensuring complete transparency during the trading process.

During Times of Crisis, Gold Serves as a Safety Net

To substantiate the preceding statement, consider the recent Covid19 crisis. Furloughs and higher debt burdens on consumers and businesses alike resulted from the nationwide lockdown. The government and the Reserve Bank of India had to raise spending while restraining rising debt levels from keeping the economy thriving. Fiscal Stimulus and Atma Nirbhar Bharat packages were used to implement such policies.

This meant an increased money supply, putting more cash in the hands of Indians. This excess decreases the currency's purchasing power, raising fears of rising inflation.

Gold, on the contrary, as an asset class, protects purchasing power against declining currencies. As a result, there is a greater demand for gold, which leads to a rise in gold prices. This vicious cycle of rising debt burdens necessitating stimulus packages always leads to a deterioration of the currency's buying power or inflation. Gold, therefore, shines brightly in uncertain times!

To Conclude

Unlike other precious metals, gold is an asset with a history. It is more than just a financial investment because it has significant emotional and social significance. Gold is purchased on any momentous occasion. Investing in gold can help diversify a portfolio's financial assets and mitigate inflation, market volatility, and currency risk.

Digital gold minimizes the risk of theft while also lowering the cost of gold investment. Digital gold can be purchased for as little as INR 100. Furthermore, because gold is traded at market prices, there is no need to be concerned about its purity or resale value. Digital gold, on the other hand, comes with its own set of difficulties. Digital gold is not regulated by any regulatory body. It also doesn't generate any passive revenue until it is sold.

If the investor's sole aim is to invest in digital gold online, they should look at gold mutual funds, such as Gold ETFs. Sovereign Gold Bonds are also available. Other kinds of digital gold include gold bonds and gold exchange-traded funds (ETFs), which are only traded in cash. These are a better option than digital gold because they are regulated by SEBI and RBI and have lower fees. Furthermore, gold bonds pay interest on the investment, making them a passive income source.

Read More: Should You Buy Gold as an Investment?

FAQ

Is it wise to invest in digital gold?

Purchasing digital gold is a viable alternative to purchasing physical gold. Investors can invest as little as Rs. 100 in a product that is backed by 99.9% genuine 24K gold. Investors considering purchasing gold for future consumption or pure investment objectives may consider investing in digital gold.

What is the best way for me to sell my gold on the internet?

The MobiKwik app can be used to sell gold online in India. The procedure is simple and requires only a few steps. Enter your registered mobile number into the MobiKwik app, enter the amount of gold you wish to sell, and that's it!

How do I get my money out of digital gold?

If a customer chooses to withdraw gold that he has purchased, he can do so for all or part of your gold holding, in amounts ranging from 1 gram to multiples thereof. The cost of producing each coin will vary depending on its weight and design.

What is the maximum amount for which digital gold can be bought?

The maximum amount is currently limited to only 2 lakh rupees which can be seen as a drawback. Once a regulatory body is involved like the SEBI, the limit will be increased.

Is buying gold on PhonePe safe?

When a customer buys gold on PhonePe, it is stored for free in a bank-grade insured locker provided by the suppliers, SafeGold and MMTC-PAMP India. The gold can't leave the locker facility without being audited, thanks to IDBI trusteeship.

What is the purity of the gold bought digitally?

The purity of gold while buying digitally is not an issue. The digital gold is 24 Karat. Although it may vary from company to company, it is assumed to be 100 percent pure.