Digital Gold
Indian families have always held gold. Digital gold is the same asset without the jewellery-shop problems — no making charges, no purity argument, no locker rent, and you can buy a hundred rupees' worth at a time.
Distributed by Naveen Kumar Pandey, AMFI ARN-276664, EUIN E521164No consultation fee
What this actually is
When you buy digital gold, an equivalent weight of physical 24-carat gold is bought and held in an insured vault by the provider on your behalf. You can sell it back online, or in many cases ask for physical delivery as coins or bars once you hold enough.
It behaves like gold, because it is gold. The price follows the market, which means it can fall as well as rise, and it pays no interest or dividend along the way — the only return is the price change.
It is worth knowing that digital gold sits outside the direct remit of SEBI and RBI. You are relying on the provider and its vaulting and audit arrangements, which is a different kind of risk from a regulated mutual fund. Gold ETFs and sovereign gold bonds are the regulated alternatives, and we will explain those too if the amount is significant.
Key facts
- Purity
- 24 carat
- Minimum purchase
- Very small — often as little as ₹100
- Storage
- Insured third-party vault, held by the provider
- Regulation
- Not directly regulated by SEBI or RBI. Gold ETFs and sovereign gold bonds are the regulated alternatives
- Return
- Price movement only. No interest or dividend
This suits you if
- Families saving up gradually for a wedding or a festival purchase
- Anyone who wants a small hedge against inflation and rupee weakness
- People who want gold exposure without a locker
- Investors adding a modest diversifier to a portfolio
We would say no if
- A large share of a portfolio — gold produces no income and can go nowhere for years
- Anyone looking for a guaranteed or regular return
Some conversations end here, with us telling you this is not the right product for you. That is a perfectly good outcome.
How it works, step by step
Buy by amount, not by weight
You can say "₹500" instead of "half a gram". The platform converts at the live rate.
The gold is vaulted for you
An equivalent weight of 24K gold is held in an insured vault in your name by the provider.
Accumulate over time
Buy whenever you have spare money. Many families treat it as a monthly habit before a wedding.
Sell back or take delivery
Sell online at the live rate, or convert to coins or bars once the holding is large enough. Delivery and making charges apply if you take physical gold.
What can go wrong
Every product has a downside. Here is this one's, in plain language, before you decide anything.
- Gold prices fall as well as rise, and gold can go through long flat periods. It is not a substitute for an emergency fund or a fixed deposit.
- There is a spread between the buying and the selling price, so a very short holding period usually loses money even if the price has not moved.
- Digital gold is not directly regulated by SEBI or the RBI. You are relying on the provider's vaulting, insurance and audit arrangements.
- Taking physical delivery brings making and delivery charges, which can be substantial on small quantities.
- Some platforms cap how long you can hold before you must sell or take delivery. Check that before you start.
Questions people ask us about this
Is this real gold?
Yes. An equivalent weight of physical 24-carat gold is bought and stored in an insured vault on your behalf, and in most cases you can ask for it to be delivered as coins or bars once your holding is large enough.
How is it better than buying jewellery?
Jewellery carries making charges and wastage that you do not get back when you sell, and purity is often disputed at resale. Digital gold has neither problem. Jewellery, of course, is also something you wear — the two serve different purposes.
How much of my money should be in gold?
For most families a modest share of the portfolio is plenty. Gold produces no income, so a large allocation drags on long-term returns. We will tell you if we think you are overweight.
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Ask us anything about this product — including how we are paid on it. We will answer straight.