When comparing physical and digital gold, it's important to consider what's most important to you as an investor. Digital gold offers superior liquidity, value and security, but some investors may prefer to have their gold within reach. Buying gold is generally kept confidential, unlike other forms of investment such as a 401k Gold IRA. However, it is recommended to keep all purchase receipts securely for income tax purposes. The minimum investment in physical gold is high.
For example, golden crackers are available in a minimum quantity of 10 grams. Therefore, buying physical gold has a higher minimum investment than digital gold. Anyone universally accepts gold in exchange for cash. Therefore, it can be liquidated anywhere in the world.
However, the price of gold varies from dealer to dealer. The resale value is lower than that of other forms of investment in gold. Gold is considered a safe haven in terms of investment and there are several ways available to invest in the precious metal, including digital gold and physical gold. Experts say that gold also improves overall portfolio performance by generating long-term returns and providing liquidity without credit risk.
Digital gold is an alternative to physical investment in gold and has proven to be the most efficient and profitable way to invest in the yellow metal, according to experts. A gold ETF works as a passive investment tool based on gold exchange rates, which is traded on stock exchanges. This means that the investor needs a demo account, which is not necessary to buy or sell digital gold. Both options are backed by physical gold, but selling a gold ETF only provides the cash equivalent.
In terms of cost, buying digital gold attracts 3% of GST on each purchase, while ETFs and funds involve annual charges of 0.5 to 1%. This is a recently launched product that allows you to buy gold in fractions of just 0.10 grams. It is a great product for those who seek to systematically accumulate gold. All gold units issued will be standard 24-carat gold with a purity of 999.9%.
This gold is preserved in a non-physical form and can be redeemed in cash or real gold bars. In reality, all the gold that is issued is backed by physical gold that the MMTC stores in separate vaults and secures at its cost. The beauty of this method of buying gold is that you can buy gold fractionally and even through your Paytm account. Three companies offer digital gold in India: Augmont Gold, MMTC-PAMP and SafeGold, which is the retail brand of Digital Gold India.
The digital gold exchange process is quick and simple, and can be redeemed in physical gold coins or ingots. However, it is only offered by certain companies, namely Augmont Limited, a joint venture between the state-owned Metals and Minerals Trading Corporation of India (MMTC), Produits Artistiques Métaux Précieux, from Switzerland (PAMP) and SafeGold, a brand of Digital Gold India Pvt. The key difference between buying physical gold (coins, bullion) directly and using the digital gold option is that there is no need to worry about the security and storage of the latter. The gold rate shown on the platform where you have digital gold is the rate per gram of pure gold (999.9 or 24k).
At the same time, since gold is preserved in a non-physical form, there is no danger of it being stolen or even lost during processing. Buying gold jewelry involves paying between 20 and 30 percent of the total value of gold as manufacturing costs, and 3 percent of the GST is charged to digital gold purchases. After financial technology companies, jewelers such as Tanishq and Kalyan Jewellers are also queuing up to attract younger, first-time customers to buy the yellow metal comfortably through the digital gold route. In addition, although it is not regulated, digital gold is safe, as a trustee regulated by the RBI supports it and the vaults are insured against theft and natural disasters.
The gold you buy is backed by physical gold, which is stored under your name in a certified vault. You can convert your digital gold reserve into coins, ingots and jewelry whenever you want and receive it. Investing in digital gold is considered a profitable and efficient way to invest in gold. But is digital gold a financial product? How does it compare to gold exchange-traded funds (ETFs)? Is it safe to invest in it? Mint gives you all the answers.
If an investor wants to buy gold only for the purpose of investing, buying physical gold is not recommended. . .
