A comparison between Digital Gold and Physical Gold : Prices, Quality, Safety, Liquidity. Charges, Storage, etc.
Loved and consumed in every form, Gold is the go-to investment for us Indians. Isn’t it? It has captivated our attention over the last many centuries.
Even today, we Indians are the world’s largest holders of this yellow metal. Indians bought Gold worth Rs 3.40 lakh crore in 2021. That’s definitely a huge stash!
On the other hand, now that nearly everything is moving towards an internet paradigm - shopping, studying, and even working from home, even investments are being made/redeemed online through demat accounts today.
So why should Gold stay behind? We now have Digital Gold. A new and increasingly popular way to invest in Gold - which is better than physical Gold.
Now you must be wondering, How is Digital Gold better than Physical Gold?
Let’s start with the basics.
What is Digital Gold?
Digital Gold is the new form of purchasing Gold through online channels. It is free of exchange rate manipulations and fluctuations, allowing you to trade all over the world without ever touching physical Gold.
Backed by physical Gold, it is a more convenient and cost-effective way for people to buy Gold.
For every gram of Gold purchased, there is actual 24k Gold stored in a locker in your name by one of India's three Gold banks - Augmont, MMTC - PAMP and SafeGold.
It is ideal for anyone who wants to begin investing and play it safe until they have a firm understanding of the market.
You can easily buy, sell or order physical Gold to be delivered at home with a click of a button on the Jar app. The best part? You can start from as low as ₹10.
Talking about its popularity, a SafeGold survey found out that 90% investors prefer digital Gold to diversify their portfolio.
But what makes Digital Gold a lucrative option? What is the difference between Digital Gold and Physical Gold?
Digital Gold vs. Physical Gold
1. Size of investment
Physical Gold: Physical Gold is sold in multiples of 1 gram, like 1 gram, 5 grams, 10 grams and so on. This basically means you need to buy at least 1 gm of Gold (more than ₹5,000 today) when investing in physical Gold.
Digital Gold: Investing in digital Gold is very affordable and can be bought and sold from as low as ₹10. You can easily invest in digital Gold even with limited income. This makes digital Gold suitable for buying for self, investing and even gifting.
Physical Gold: In Indian households, it's common to see the elders storing physical gold in lockers. That poses a significant risk since there is always concern that it will be stolen.
In order to prevent this, it is kept in a bank locker for an extended period of time. This results in storage expenses such as registration fees, annual fees, service fees, etc.
Digital Gold: You can do away with long-term costs and storage issues with digital Gold. safe is free or insured at face value.
3. High liquidity
Physical Gold: Gold is the most liquid commodity when compared to other asset types. However, there are still liquidity problems with physical Gold.
In order to sell physical Gold and receive its full resale value, you must sell to the dealer you originally purchased it from. To receive the full resale value, the original purchase receipt is also necessary.
Digital Gold: Digital Gold can be easily bought and sold anywhere and anytime. You don't need to visit a dealer or keep a secure Gold purchase account for many years to get the full resale value of the Gold in the future.
Physical Gold: To buy or sell physical Gold, you have to postpone one day and go to a jewellery store or bank, which is time-consuming and inconvenient. If you want to buy Gold, you need to have a Gold locker on hand.
Digital Gold: In comparison to trading in physical Gold, trading in digital Gold is more convenient. Anytime, anywhere, and in just a few easy steps, you may buy and sell digital gold online.
The funds are immediately transferred to your designated wallet or bank account following a successful sale within a few days.
5. What you pay for
Physical Gold: When purchasing gold jewellery, you must not only pay the gold price, but also making charges and pay additional taxes. Jewellers charge anywhere from 20% to 30% of the value of your jewellery, depending on the design.
If the chosen piece of jewellery contains precious stones and gems, the price rises, and its value is reflected in the Gold price. When dealing with gold jewellery, there is no need to collect or restore the value of the inlaid jewellery.
Digital Gold: You can only trade pure Gold (24 carats) with digital Gold. The total amount you spend is solely invested in gold. You will only have to pay 3% GST at the time of purchase.
Additional read: 10 Compelling Reasons Why You Need Digital Gold
Physical Gold: Physical gold is commonly referred to as a "store of value" due to its safety and stability. But there is always a constant fear and possibility of physical loss or theft.
Digital Gold: Many people are hesitant to invest in digital gold because it is a new concept and they are unfamiliar with it. But don't worry, digital gold is a secure investment option.
The majority of providers insure digital gold, which is already safely held on your behalf by third-party vault providers. Every gram of gold in your account is backed by actual physical gold. This means that you are never in danger.
Physical Gold: Physical Gold prices are not the same across the country.
Digital Gold: Digital Gold prices are uniform across the country.
Physical Gold: Physical Gold’s purity may or may not be 100%..
Digital Gold: Investors don’t have to worry about the purity of Digital Gold as only 24 karat Gold is possessed by the investor and its quality is never compromised.
Read about Income Tax on Selling Physical & Digital Gold here.
As you can see, digital Gold is the clear winner here. It may take some time to transition from physical Gold, but it is the only way forward.
A step in that direction would be to separate the ornamental usage from the investment product as physical Gold is best used for consumption rather than as an investment.
What are you waiting for? Daily Gold Investment is now Hassle-free with Jar App.
Buy Digital Gold from the Jar app today. Download now!