What Is Digital Gold Investment?


Author: Loyd
Published: 14 Nov 2021

Digital Gold

Gold is a liquid asset class. Digital gold is even better. The payment will be credited to your bank account after you log into your customer portal and sell the digital gold.

Online Gold

Can you buy gold for a small amount? Not at your neighbourhood store. You can buy Digital Gold online for as little as Re 1.

During high inflation and systemic risk, gold is a good choice for a portfolio. In the last year, gold prices have increased in India. Digital gold is a better investment option if the buyer is not looking for any ornaments.

Online Purchase of Digital Gold

The gold assets are held in a vault. There is no need to be concerned about theft or loss. The seller is responsible for the gold.

The maximum holding period is set by the businesses that sell gold, after which the investor must sell the gold or convert it into physical gold. Various merchants have different restrictions. The maximum holding time for MMTC-PAMP is five years.

You can keep the gold for up to 5 years without paying storage fees when you buy it online from MMTC-PAMP. You must conduct a transaction once every six months to keep your account active. You have to sell the gold or make gold coins when the period is over.

There are no fees for the first two years. A fee of 0.05 percent is paid if the amount of gold is less than 2 grams. The gold payments are withdrawn after a month.

Every digital gold unit is backed by 24K gold. There is no need to be concerned about gold purity. Digital gold can be purchased for as little as Rs. 100 and can be invested online at any time of the day.

Gold as a Safe Haven Investment

As a safe haven investment, gold is known as a diversifier and mitigates losses in times of market stress. Gold improves portfolio performance by generating long-term returns and providing no credit risk.

Short-term capital gain portfolio design

Short-term capital gain or STCG can be defined as the returns from digital gold for 36 months or less. The returns are added to your income. Income taxes are charged according to tax slabs.

Trading Digital Gold

The broker charges a small amount for digital gold. The brokerage is Rupee 1 per lakh for the ETFs. Physical gold can be converted into digital gold.

The minimum quantity is what distinguishes the difference. The minimum amount of digital gold that can be traded is 8 grams. The minimum quantity required for converting the ETFs into physical gold is 500 grams.

Digital Gold Investment

When an investor buys digital gold, the trading companies check the purity of the gold and store it in a safe vault. The gold is removed from the vault when the investor sells it. Digital gold investment offers several benefits over buying gold in the physical form.

It doesn't involve any cost to store or protect it. The process is very transparent since the trading happens online. There are 9.

Digital gold is traded online and one can easily track the movements on a real-time basis. The price movements can be used by investors to make sales or purchases. There are 12.

The government has implemented strict limits on gold holdings. Any household found holding more than the set limit would be subject to strict action from the law and further inquiries from the tax department. Since digital gold is documented, there is no limit on how much you can invest in it.

Indians think gold is an old investment option. People have traditionally invested in physical gold, but it has its own set of challenges. So, suppose you are wondering how to invest in gold safely.

Why is gold investment famous when there are other alternatives? The value of investment options is derived from money. Fiscal and trade deficit is an acceptable bargain for a developing nation.

All investors are at par with gold investment. How? The price of gold is the same everywhere.

Hyperinflation is a condition where the prices of goods and services increase. Zimbabwe saw hyperinflation in 2008. Prices were doubling every 24 hours in the worst time.

In 1933, prices in Hungary doubled every 16 hours. One can buy gold bars from banks. The gold purchased from banks is of unquestionable purity and is available in sealed covers.

Good jewelers in India sell coins and bars. Physical gold purchases have costs. 3% of the price of gold is tax.

Digital Gold Investments

The last 10 years have seen a 300% increase in gold prices. It is easy for investors to resell gold at current market value without paying any extra fees if they invest in digital gold. Funds can be easily transferred to a registered bank account.

You can invest small amounts of money in gold, which will allow you to develop a stable investment portfolio and protect your financial future. The price of digital gold is determined by the wholesale market rate, not by local factors such as geography or a global pandemic, making it more affordable for buyers. You can invest online with partners like GPay, Pay and PhonePe.

If you have access to wealth management services, you can speak to your relationship manager at firms like Fisdom, and also at HDFC Securities. They will allow you to invest in gold that is pure. Gold investments have been seen as a stable option and have found a good place in portfolios for generations.

While the way gold is held is changing, it is still likely to be included in a long-term wealth-building kitty. The preferred way of investing will change as the average of the investors keeps changing. Digital natives who are interested in building long-term wealth should consider investing in digital gold, a trusted instrument in the digital space.

Gold as a Portfolio Diversifier

Individual investors and even institutions have embraced gold as a portfolio diversifier. During an economic slump, gold performs better than other assets because it is uncorrelated with the market.

Digital Gold Buying in India

Hindus in Indiand Nepal celebrate a festival called Akha Teej or Akti, which is also known as the "Akha Tritiya". The festival is good for buying gold. Buying gold physically is not an option in India because of the Covid-19 epidemic.

If the purpose of buying gold is solely for investment, it may not be the wisest option. Buying digital gold is as easy as topping up your cell phone plan. It can be purchased online from many sources and is stored insured vaults by the seller.

You can invest in it with mobile e-wallets. Digital gold investing can be done by brokers such as HDFC Securities and Motilal Oswal. The lack of regulation, the cost of goods and services, and the limit on investment horizon diminish the appeal of digital gold.

SGBs have partial withdrawal option after 7 years. The secondary market can be used to exit the investment. If SGBs are sold after three years, then long-term capital gains tax will be applicable.

Prescriptions for a New Metal

The precious metal price and any applicable premium are included in the prices. The premium above the precious metal price is what is applied to promotions and discounts.

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