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Gaurav Mathur

MD, SafeGold

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India’s digital gold rush: A smart way to invest in gold

With the digital revolution expanding to the gold market, the number of Indians transacting in gold has augmented, leading to the country becoming the largest digital gold market in the world. Here is why digital gold is a smarter way to invest in gold

India’s love for gold is centuries old. Over the years, the much-loved yellow metal has remained one of the popular asset classes in the country, from the incredibly wealthy to some of the most humble individuals looking at gold as a valued investment. It is not just a reliable store of value but comes with the added utility of being turned into dazzling jewellery. With the digital revolution expanding to the gold market, digital gold has become one of the most popular investments over the past few years.

Digital gold explained:

Digital gold is nothing but vault-stored gold that can be accessed via digital channels. Consumers are the legal owners of this high-purity gold that is securely stored under the purview of an independent trustee. The digital gold has received so much consumer love that within four years of introduction to the country, nearly 100 million consumers own digital gold today. In comparison, it took about 20 years for our country to witness 70 million individuals opening their Demat accounts. Therefore, it is not surprising that the largest digital platforms in the country today, including e-commerce portals, wealth management channels, banking and payment apps, are offering digital gold as part of their offerings. This skyrocketing popularity has made India the largest digital gold market in the world.

Reasons behind digital gold demand:

There are six primary reasons why consumers are loving digital gold:

1. Better pricing than nearly all offline options for buying gold

2. Can purchase for any amount, starting Re 1 (which is not feasible with offline gold buying)

3. Guaranteed purity

4. Zero cost for secure and insured storage of gold for up to five years, and a very nominal charge thereafter

5. 24/7 availability for buying/selling with instant settlement

6. Multiple options to take delivery of gold, ranging from doorstep delivery of coins and bars to exchanging digital gold for jewellery at leading retailers across the country

Weighing various gold investment options:

Considering there are multiple ways to invest in gold, there is no single “right product” for everyone. So, how does one choose between physical gold, digital gold, sovereign gold bonds (SGBs) and gold funds?

If you do not need liquidity for 5+ years and are looking at allocating a part of your investment portfolio to gold purely for financial reasons, then SGBs are the best option for you. For short to medium term speculation on the price of gold, Exchange Traded Funds (ETFs) or gold futures are the ideal instruments. In case you want to have the option to take delivery of physical gold, then digital gold makes the most sense as you get the safety of guaranteed purity, highly competitive pricing and the ability to conveniently accumulate balances over time.

While digital gold is not regulated by SEBI or the RBI at the moment, according to recent reports, the regulators are looking at framing guidelines for the industry. Such a step is welcomed and will lay the foundation for the robust growth of the digital gold space in the country.

Future of digital gold:

The digital gold industry has a pipeline of exciting products. You will soon be able to secure instant online loans against your digital gold balance, subsequently deposit your digital gold and earn a yield on your digital gold balances. The Indian digital gold industry is leading the world with products being developed in India going global and expanding to other countries.

So, the next time you open your favourite e-commerce or fintech app, look for digital gold and consider investing in the future of money!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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digital gold investment transaction jewellery

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