The advent of technology has brought about several ways of investing in gold. Gone are the days when people used to buy physical gold for the sake of investment. Today, you will incur unnecessary expenses such as wastage and making charges when you buy physical gold. Not to forget, you have to pay a GST at the rate of 3% on the entire purchase value.
Gold is a traditional investment, and there are hardly any Indian households that possess no gold with them. Also, gold is considered a hedge against inflation and market slide, so investors are naturally attracted more towards gold. Today, you can gain exposure to gold through investing in gold ETFs, gold mutual funds, sovereign gold bonds and digital gold.
By investing in these options, you will not risk theft as you get gold units in electronic form. However, digital gold, the newest form of investing in gold, can be a safe and most profitable form of investing in gold for investors. Digital gold is offered by select websites and mobile apps in India, in association with Augmont Enterprises Private Limited, Metals and Minerals Trading Corporation of India (MMTC) and Produits Artistiques Métaux Précieux) PAMP.
Every purchase of digital gold is backed by physical gold of the highest purity. The issuing company would place an equivalent amount of physical gold of the highest purity in a safe vault on your behalf. You may opt to receive physical gold delivered to your doorstep at the time of redemption of your investment. Here’s why you should consider investing in digital gold:
i) Gold of highest purity
As mentioned earlier, by investing in digital gold, you will gain exposure to the gold of the highest purity. The concerned party will place the corresponding amount of gold in a vault on your behalf. IDBI Trusteeship protects these vaults. Therefore, you need not worry about the purity and safety of your gold units.
ii) You can start with just Re 1
The price of a gram of gold today stands over Rs 4,500. As a result, the yellow metal has become unaffordable for most retail investors. The recent market developments have also pushed the price of gold further as investors resort to investing their money in safer havens like gold to protect their capital. This is where digital gold scores better, as you can start your investment with just one rupee.
iii) Highly liquid
You can redeem your investment at any time with no additional charges being imposed (except for the delivery charges if you opt to receive physical gold upon redemption). The transaction will be processed instantly, and you will receive your money in your account through an instant bank transfer. This feature is of great help at times of emergency.
iv) Keep up with the latest developments
As your digital gold transactions are processed instantly, you can track the latest developments in the market and make your decisions accordingly. This feature of digital gold will help you keep up with the latest developments on a real-time basis. Also, the digital gold providers accept payments in various modes, and you can choose the one you are most comfortable with.
Digital gold is an excellent form of investing in gold. You will not have to hold gold physically, and hence, you will not incur charges towards storage and run the risk of theft. The taxation of digital gold follows the same norms as physical gold.
For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in
Engineer by qualification, financial writer by choice. I am always open to learning new things.
