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What is Digital Gold?

By Shlok Kamat

1st Apr 2022

3 mins read

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Gold has been a reliable investment option and a symbol of wealth since ages, getting passed on from mothers and grandmothers down to the younger generations. It is believed that all of the gold present in the earth’s crust has been mined; there is very little possibility of finding more reserves of this metal and hence it is deemed to be precious. All the gold available to us today is in circulation and hence there is no ‘store’ from which ‘new’ gold can be added into circulation. This has resulted in gold having tremendous store value and hence is considered very stable in terms of its returns.

Digital Gold is the new, and much more efficient iteration of storing this lustrous asset. This risk-free, storage-proof investment instrument is a perfect blend of both technology and the traditional importance Gold has.

This blog is meant to be Step-1 in easing your way into this investment avenue. So, how to finally start with Digital Gold, you ask? Let’s find out.

What is Digital Gold?

Before going any further, it’s important to cover this question. Digital gold is an online Gold alternative which enables you to hold gold virtually without owning a safe or bank locker. The seller keeps an equivalent weight of physical gold in a secure vault for each online purchase.

Benefits of Adopting Digital Gold

  • Taxation: Returns on digital gold assets held for less than 36 months are not strictly taxable. In the case of long-term capital gains, one would  have to pay a 20 percent tax on the whole amount, plus a surcharge and a 4% cess with indexation benefits. This is great for investors who want to build an emergency fund in the short to medium term.
  • Storage: One does not have to pay bank locker rent, insurance cover or additional investment of Fixed Deposit (FD). The seller promises that the digital gold is stored in an insured, secured vault at no extra cost.
  • Liquidity: Digital gold can be sold or redeemed at the click of a button. You can sell the digital gold instantly and the value of your gold is instantly transferred into your bank account through a 24x7 market-linked rate.
  • Portfolio Diversification: It is a good investment option for portfolio diversification and a good hedge asset.
  • Making charges: Gold in jewellery form attracts at least 8%, making charges and the price of gold while buying it. This increases the buying cost and depreciation of returns; thus, investors now tend to buy digital gold free from any form of making charges.
  • Invest in small amounts: There is no minimum threshold to buy digital gold. One can start investing with as low as INR 10. This surely helps in accumulating assets over a long period of time.

Digital gold is the perfect instrument to begin your investment journey. It is a great way to create robust long-term wealth. One can invest in fractions as low as INR 10 and there is no cap on your investment too.

Criteria Digital Gold Gold Bonds Gold ETFs Physical Gold
Ease of Trading Can be traded 24*7 Can only be traded once listed on the exchanges Trading permitted only during market hours Difficult to find genuines buyers
Physical Delivery Avaliable Not Available Not Available Usually used for personal consumption
Minimum Investment As low as INR 10 As low as 1 unit of gold (roughly equal to 1 gram of gold) Varies from ETF to ETF Depends on the weight
Storage and Security High as kept secured in a vault Sovereign Guarantee High Varies with location

Parting Words

In a time where investments are subject to market risks, the yellow metal has always emerged as a consistent performer. With wider adoption of digitalisation, digital gold stands a very strong chance to emerge as a powerful investment instrument.

Over the next few blogs, we will dive into the specifics of investing in digital gold - setting up your account, linking your bank account and finally placing your first order.


Who holds onto the gold when I invest digitally?

Backing for the physical gold is provided by the following players:

  • Augmont Limited, a joint venture between state-owned Metals and Minerals Trading Corporation of India (MMTC) and Produits Artistiques Métaux Précieux, Switzerland (PAMP)
  • SafeGold brand of Digital Gold India Pvt. Ltd.

Can I redeem my digital asset into physical form?

Yes, one can redeem his/her digital gold into physical form by requesting for physical delivery of the same. Do keep in mind that you would have to pay making charges for the same.

What are the costs associated with owning digital gold?

One has to pay 3% GST when placing the order to buy digital gold.

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Made with ❤️ in India