Digital Gold - Meaning, Types, Benefits, Process to Invest

Digital Gold is a profitable avenue of investment. Find out why should you invest in digital gold, benefits, types, and process of Investment.

Created On: Jul 9, 2021 19:05 IST
Digital Gold Investment
Digital Gold Investment

Culturally, Gold holds great importance in Indian households, and investment in gold is considered one of the best decisions that one could make to safeguard the future in terms of financial planning. Looking at this perspective, Indian financial market has opened up a lucrative avenue of investment where people will no more have to deal with the risk associated with the safety of physical gold valuables.

Individuals can invest in gold digitally. Just like other avenues of investment, such as Mutual funds, Fixed Deposits, and Equity shares to name a few, one can buy gold digitally. In this article, find out why ditching the traditional form of physical gold investment is beneficial in contemporary times. In addition, know how to invest in digital gold, and what are the types of digital gold investment available in the market.

Forms of Digital Gold

Digital gold can be bought in several forms. Investing in gold digitally is quite different from buying physical form of gold. Here are some forms in which you can invest in digital gold:

Gold Exchange-Traded Funds (ETFs)

One of the popular forms of buying digital gold is Gold ETFs which are traded on the stock exchanges and are similar to equity mutual funds. Investors can purchase this form of digital gold through the Broker’s platform. Each unit of a gold ETF represents one gram of gold which is of 99.5% pure.  

Sovereign Gold Bonds (SGBs)

Reserve Bank of India (RBI) rolls out the debt instruments which can be purchased by interested investors to reap profits. The Gold SGBs can be purchase in a quantity as low as 1 gram. The Bonds are issued for a limited period of time and are traded as per the discretion of RBI.  

MCX Gold Contracts

At the Indian commodities exchange, which is the Multi Commodity Exchange or the MCX, gold is traded online. Investors can deal in hedging, speculate, and trade gold through MCX platform and reap profits depending upon the free-floe market price.   

Benefits of Digital Gold Investment

Digital Gold is a profitable avenue of investment. There are various benefits of purchasing digital gold. Some of them are listed as under:-  

Purity: Digital gold is 100% pure and investors can be assured that 24-carat gold (highest purity) is traded online. However, in case of physical gold lot of fraudulent practices takes place.

Safety: One of the best decisions of investing in digital gold is that it can be kept safely in the DMAT Account. In other words, digital gold is devoid of theft as opposed to physical gold. Storing digital gold is more convenient than physical one as one need not take any bank locker facility or insurance to keep the valuables safe.     

Liquidity: Digital gold is a quick liquid asset and it can be bought and sold in no time through the trading platform. In case of physical gold, the government-hallmarked jewelry has high value then other type of metal.

Wear and Tear: Digital gold doesn't face any kind of risk of wear-and-tear. The regular use of gold in physical form decreases its resale value.  

Steps to Trade in Digital Gold

Digital gold can be sold and purchased through DMAT account and broker platforms. Investors are advised to follow the steps mentioned below if they wish to trade in digital gold:-

Step 1 - Get a DMAT account through a broker that you find best in market.

Step 2 - Ask broker if they trade in digital gold through their platform.

Step 3- Once the DMAT account is ready, then enter an amount in INR or grams that you wish to purchase. Please note that the gold will be available on daily basis at the live market rate.

Step 4- Choose a payment method that is convenient for you such as an account, card, or wallet.

Step 5 - Choose to sell your gold digitally itself to the platform whenever you want.

Step 6 - As an investor, you can even take physical delivery of the gold if you doesn't wish to sell the digital gold

However, it should be noted that the physical delivery of Gold is delivered in the form of coins or bullion.


*Disclaimer - The information provided above is only for information purposes to spread financial knowledge and enhance literacy among our readers. It shouldn’t be taken as financial advice by anyone.

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