Key advantages of investing in digital gold

Gold prices have been falling for quite some time now. This diminishing value of the yellow metal, experts believe, is good news for customers looking to buy up gold ahead of the summer wedding season and Akshaya Tritiya – considered the second-most auspicious day to buy gold for Hindus after Dhanteras.

While traditionally gold was exchanged or bought in a physical form and it still is, there are certain problems attached to it such as storage or chances of theft, purity concerns, etc. Given the problems associated with physical gold, individuals have now started moving towards digital gold i.e. gold ETFs, gold mutual funds, or sovereign gold bonds.

A lot of customers also prefer to invest in digital gold to avoid the risks of visiting a jeweller amid the pandemic.

Unlike investing in physical gold, according to Puneet Maheshwari, director, Upstox, investment in digital gold does not mean that one has to shell out a lot of money.

The lowest amount one can invest in digital gold at various platforms starts at as low as Re 1. This means individuals can invest in digital gold according to one’s budget.

Digital gold is stored online and secured in vaults.

As per Maheshwari, online storage saves on space, providing an edge over the hassle of worrying about the security of physical gold lying at home. To protect the interests of investors, some platforms also offer transit insurance.

With these, Maheshwari points out that the investor is at liberty to redeem his/her gold at any time. Once the investment period is over, the gold is securely and physically delivered to one’s doorstep, saving one the hassle of going out and purchasing it on own.

Maheshwari says that the quality of digital gold is set as per QA standards and most vendors guarantee 99.5 percent purity. This means that one can be confident of investing in digital gold.

However, the purity offered for digital gold depends on the vendor that the platform has partnered with. Hence, it is of utmost importance to read all details and FAQs provided by the platform to find out who the vendor is and the purity they offer.

Digital gold enjoys the benefit of being highly liquid and can be converted at any time. For example, gold ETFs do not charge any exit loads and offer higher liquidity.

Units of gold funds can be redeemed by selling them back to the fund house based on the NAV for the day.