TomorrowMakers

As India embraces financial literacy and the desire to engage in various asset classes, the idea of investing in the digital version of a commodity that the country loves in physical form is slowly beginning to take shape.

 Invest In Gold Digitally

In India, physical gold is still the most famous traditional method of gold investment. However, people are now looking for digital gold investment too. Here are your options and how to invest in digital gold if you want to have a virtual gold investment.

If you are still confused about whether or not to invest in gold online, this video is for you: 

What Does Purchasing Gold Online Mean?

With the convenience of digital access to the commodity, you can invest in tiny fractions of the yellow metal at any time, anywhere.

The Different Ways Of Digital Gold Investment

Nowadays, there are more than one ways to invest in gold online. Here are the most prominent ones.

Soverign Gold Bonds (SGBs)

The Reserve Bank of India (RBI), India's central bank, offers SGBs, debt securities that allow investors to buy gold in increments as small as 1 gram. Investors carry out the trade by investing in a series the RBI makes available for set durations.

Similar to how an initial public offering (IPO) or public listing of a firm is made for a predetermined time limit to subscribe to its shares, SGB series are publicised and available for investors.

Exchange-Traded Funds for Gold (ETFs)

Equity mutual funds are similar to gold ETFs, traded on stock markets. Each unit of a gold ETF represents a 99.5% pure one gram of gold. ETF units derive their value from the actual gold that the depositories hold. Investors can choose from a large selection of gold ETFs sold by several funds.

Find out Gold ETFs vs Physical Gold: Which one is better?

Gold Contracts on MCX

Gold contracts offer a way to trade the metal through India's renowned commodity exchange, the Multi Commodity Exchange, or MCX. In essence, MCX gold contracts are derivative options and futures contracts that give investors the chance to speculate, hedge, and trade in the metal for a brief period. These are best traded under supervision and are appropriate for more seasoned investors.

One of the many metals traded on the MCX is gold. Investors can trade in gold contracts for a minimum of one gram of the commodity. On the MCX, investors can trade in quantity-specified products such as "gold mini," "gold," "gold petal, " and "gold guinea." 

Digital Gold Businesses

Businesses like Google Pay, PhonePe, and Paytm through their web platform or mobile application, offer services that facilitate purchasing and selling digital gold for an investment as low as INR 1, enabling digital gold investment and trade. Businesses like SafeGold and MMTC-PAMP manage the protected locker facilities and depositories that store the underlying gold. For instance, Google Pay stores its gold using MMTC-PAMP.

How to Invest in Gold Online?

To invest in gold ETFs and SGBs:

  • You must possess a Demat account and PAN card connected to a bank account.
  • You can purchase specific gold goods via reputable stock exchanges after opening a Demat account, or you can do so directly through SGBs and gold ETFs.
  • You have two options for selling your gold digitally: either holding it till maturity and then redeeming it or selling it on the secondary market or stock exchanges.
  • Additionally, several businesses give customers the option to purchase digital gold starting at INR 1.
  • Know-your-customer (KYC) documentation must be accurate and checked before the purchase. Typically, KYC involves the person's PAN and Aadhar Card information. E-KYC and video KYC are two available Demat KYC modes that streamline and hasten the process of opening an account to purchase gold digitally.

Where in India Can I Buy Digital Gold?

The following are some direct options for purchasing gold in digital form:

  • You can purchase SGBs from RBI when it announces the series of these bond offers.
  • The mutual funds that provide the product have gold ETFs available for purchase.
  • The MCX sells MCX gold contracts, which you can acquire straight from them.
  • You can purchase other companies' varied products on the websites or mobile applications that offer digital gold, which should be KYC-verified.

Here's a list of the Top 4 Apps And Platforms For Buying Digital Gold In India

  • The indirect option is trading in the secondary market or purchasing from exchanges like the Bombay Stock Exchange and the National Stock Exchange, which provide a venue for buyers and sellers to engage in trade and operate as brokers.

The Bottom Line

The Indian federal government made it clear in the FY 21-22 Budget that SEBI will regulate gold exchanges. This action will likely increase consumer confidence in the commodity market, especially among retail gold buyers and traders.

With SEBI functioning as the regulator, the buying and selling gold process is streamlined, similar to the dematerialisation of shares. The regularisation by SEBI has led to a smoother process of delivering the gold product in one trading day and two extra days, popularly referred to as T+2 days.

You must be more financially savvy and receptive to novel investment products for the idea of purchasing and selling digital gold to become more widely accepted.

Disclaimer: This blog is for informative purposes only. Kindly do not take it for professional advice. Since market risk affects all financial plans, you should invest at your own risk.