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Digital Gold vs. Physical Gold: Is going Digital a Smarter Investment?

April 21, 2023

Table of Contents

    Table of Contents

      What's the difference between Digital Gold & Physical Gold? Is it worth investing in Digital Gold? All you want to know to take a decision on Digital Gold Investment.

      We Indians love gold, don’t we? Be it gold jewellery, gold coins or biscuits, we consume gold in various forms.

      We see it not only as a symbol of wealth and prosperity, but also as an investment against the effects of inflation.

      Investing in this precious metal helps in neutralising the effects of other high-risk investment instruments such as mutual funds and stocks.

      Now as the entire world goes digital, digital gold is becoming more and more popular.

      But what’s the reason behind this popularity and how is it different from the physical gold at our homes? Jar has a guide for you:

      What is Digital Gold?

      Digital gold is simply an alternative to physical gold. It is free from exchange rate manipulations and variations and allows the investor to easily trade throughout the world without actually touching physical gold.

      In India, you can buy digital gold through multiple apps and websites; however, only 3 gold companies keep your gold, namely Augmont Gold Ltd, Digital Gold India Pvt. Ltd. - SafeGold, and MMTC-PAMP India Pvt. Ltd. It is a safe, convenient and cost-effective way of purchasing and investing in gold online that does not even require any additional storage and transportation costs. Find out how you can invest in digital gold with Jar here.

      Digital Gold vs. Traditional Gold

      1. Size of investment: When investing in physical gold, you need to buy at least 1 gm of gold, whose price fluctuates everyday. Whereas, investing in digital gold is very affordable and can be bought and sold from as low as ₹1. It’s affordable and you can easily invest in digital gold even with limited income. 

      1. Storage: In our Indian households, we’ve usually seen our elders keeping physical gold in lockers. That’s very risky as there’s always a fear of it getting stolen. To avoid this, it is kept in a bank locker for the long-term which then incurs storage costs in the form of registration fees, annual fees, service fees, etc. 

      Digital Gold allows you to get rid of long-term costs and storage problems. The safe is free or insured at face value.

      1. High liquidity: Compared with other asset classes, gold is the most liquid commodity. However, physical gold still faces liquidity issues, such as: to liquidate physical gold and get the complete resale value for it, selling it to the dealer from whom you bought it is mandatory. The original purchase bill is also a requirement in order to get the entire resale value. 

      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. 

      1. Trading: Trading digital gold is more convenient than trading physical gold. To buy or sell physical gold, you have to postpone one day and go to a jewelry store or bank, which is time-consuming and inconvenient. If you want to buy gold, you need to have a gold locker on hand. 

      On the other hand, digital gold can be bought and sold online anytime, anywhere, in just a few simple steps. After a successful sale, the money gets directly transferred to your registered wallet or bank account within a few days. 

      1. What you pay for: When buying gold jewellery, you not only have to pay the price of gold, but also making charges and additional taxes. Jewellers charge anywhere from 7% to 25% based on the design of your jewellery. If the chosen piece of jewellery includes precious stones and gems, the cost increases and its value is also included in the gold price. When you deal with gold jewellery, you never need to collect or restore the value of those inlaid jewellery. 

      With digital gold, you only trade pure gold, which is 24 carats of gold. The total amount you spend is invested in gold only. You only have to pay 3% GST at the time of making the purchase.

      1. Safety: Many people are reluctant to invest in digital gold because it is a new concept and they lack knowledge in this area. But not to worry, digital gold is safe as an investment choice. Every gram of gold accumulated in your account is backed by real physical gold. This means that you are at no risk at any time. 

      To put it in a nutshell, here’s a table to help you understand the difference better and make your decision: 

      While digital gold might seem like an obvious winner, here, it really depends on what you want out of an investment. Both digital and physical gold have their pros and cons, but at the end of the day, do your research and understand which method works better for your situation.