Hello friends,
Gold prices are skyrocketing in India these days, and in such a situation, keeping large amounts of physical gold at home is not safe or practical.

That’s where buying digital gold comes in as a smart and secure alternative! In today’s blog, we’ll explore everything you need to know about buying digital gold—its advantages, disadvantages, and, most importantly, when, why, and how you should invest in it.

What is digital gold?

Friends, the easiest way to buy digital gold is that we can buy it on fintech apps
like Paytm, PhonePe, Groww’s digital gold platform, which is exactly like buying
physical gold from a gold shop, as it is a simple and safe way to buy 24-carat gold.
This is 24-carat gold of 99.99% purity provided by MMTC-PAMP.

How does digital gold work?

Digital gold is such a modern and convenient way through which we can buy gold anytime
and anywhere.
The process is very simple and requires only some clicks. You will be happy to know that
there is no need to keep any minimum balance to buy digital gold, which means you can buy
gold of even just 1 rupee.

Your purchased gold is completely safe as it is kept in the state-of-the-art lockers of MMTC-PAMP and Augmont Gold.
You don’t have to pay any extra fee for this protection, making it even more attractive.
Whenever you want, you can order your gold through a secure delivery network, and it will
be delivered to your doorstep in no time. Thus, digital gold is not only easy to buy,
But it is also safe and convenient, making it a great option for investment.

Follow these steps to buy digital gold on the Paytm app:

1) Download the Paytm app from the Play Store and log in by entering the one-time password
(OTP) through your mobile number.

2) Type “Services” in the search bar at the top of the app’s home screen.

3) In the list of services, you will see the option of “Paytm Gold.” Tap on it.

4) You will get the option to buy gold in the Paytm Gold section. You can buy gold using a credit card, debit card, or Paytm Wallet.

5) If you have already purchased any gold, its quantity and current price will appear on
the screen. In addition, options such as “Buy More” and “Withdraw” will also appear on the
screen. In the “Your orders” section, you can see all the orders you have made.

6) Tap on “Withdraw” to sell gold. You will see the option “Cash in Bank” in the popup.

Here you can choose to sell gold in rupees or
according to the gross weight. Also, you will be able to see the current gold price.

7) After selling the gold, you can transfer the amount to any bank account.

Advantages of buying digital gold:

1) 100% digital and easy to buy:

Buying digital gold is very easy. You can start investing with just ₹1 from anywhere and
anytime, 24×7.

2) High purity and safety:

The digital gold comes with 24k purity and 99.99 percent purity. While physical gold’s
Security, storage, and locker costs are a challenge; digital gold does not have these problems.
There is no need for a locker, and the risk is very low.

3) Storage and insurance includes:

The digital gold purchased by you is stored in a high-security vault of a government-backed
institution (such as MMTC-PAMP).
You don’t have to pay any additional storage or insurance charges. This gold is insured
against theft, loss, or other calamities.

4) Immediate availability of cash:

Digital gold can be sold anytime, and as soon as you sell, the amount is immediately
transferred to your wallet or bank account.
It does not require any waiting period, trading hours, or complicated procedures to be followed.
You can sell it in a few minutes by watching the live market rate.

5) Ideal for small investors:

Even if you don’t have a large amount, you can start investing in digital gold with a very
small amount (₹1 or ₹10). Just like SIPs in mutual funds allow you to save a little every month, small investments Investing in digital gold can help you build your portfolio gradually. This method is especially
beneficial for new and small investors.

Disadvantages of buying digital gold:

1) Lack of a regulatory body:

Digital gold is not yet regulated by any government regulatory body such as SEBI or RBI.
This means that the investor does not get a full security guarantee.

2) GST charges:

Whenever you buy digital gold, 3% GST is levied on it. That is, 3% of your total amount
is deducted as tax, which slightly reduces your return.

3) The difference in the buyback rate:

When you buy gold, its rate is slightly higher. But when you sell the same gold,
You get a “buyback rate,” which is always lower. If you buy gold and immediately
sell it at the same time, then there is a big difference between the purchase and sale price,
which can lead to losses.

4) Delivery charges:

If you want to convert digital gold into physical jewellery, you also have to pay making
charges (manufacturing charges) and delivery charges. So the total cost is affected not only by the price of gold but also by these additional expenses.

5) Not suitable for long-term storage:

It is not considered appropriate to keep digital gold for more than 5 years. There is no clear government regulation on it yet. Long-term exposure can increase the risk.

6) No interest or dividends:

Unlike fixed deposits (FDs) or mutual funds, digital gold does not earn interest or dividends.
The profit is made only when the price of gold increases. If the price does not increase,
Your investment can stay there.

My experience of buying digital gold:

That was a few days ago. I was in dire need of cash all of a sudden, but there was not
enough money in my bank account. I thought, why not convert to cash using a credit card?
With this thought in mind, I bought digital gold worth ₹5000 on a large fintech platform.
But when I tried to sell it a few minutes later and saw my balance, I was shocked. The balance was showing just ₹4600!
Surprisingly, the live price of gold was a bit high, yet how did gold of ₹5000 become ₹4600
in minutes? I immediately downloaded the purchase invoice from the app.

The invoice showed that the actual purchase was ₹4850 after deducting 3% GST.
This was understood, but now the question was, why is ₹4600 showing while selling gold
worth ₹4850?
Then I checked the “selling price”—and “that’s where my senses were blown.
The live price of gold on the app was around ₹10,060/gram, but when you go to sell,
The same rate was close to ₹9660/gram.
That is, if I had sold gold at the same time, I would have suffered a direct loss of about 8%.

Conclusion:

Digital gold can be a good option in terms of security, but it cannot be considered the best option for investment. Because digital gold is not controlled by any government regulatory body like SEBI or RBI. People usually buy gold as a long-term investment. Sovereign Gold Bonds, from this point of view, can be a better option, as they also offer 2.5% annual interest.

However, since gold bonds are less liquid, gold ETFs are better for short-term hedging. It is more appropriate to invest in them as they come under a regulatory body like SEBI.
As soon as the investment limit of ₹2 lakh is fixed on digital gold and an official
regulatory body is appointed, then it will be given to those investors.
It can be an attractive option for those who prefer to invest through digital medium
instead of physical gold.