April 18, 2024

Points To keep In Mind Before Investing In Digital Gold

Gold is among the most precious and valuable metals in India. Indians’ obsession with gold is known across the world. It is widely preferred for both consumption and investment purposes, making India the second-largest consumer of gold after China. 

With growing volatility in the market, Indian investors resort to portfolio diversification to ensure the continuous outflow of cash/earnings. Investing in digital gold is another popular investment option for investors after considering all financial goals and market conditions. With the rise in gold prices, it has been one of the best-performing assets for over a decade.

Furthermore, Indians also use gold as a means to take gold loans. Acquiring gold finance enables customers to meet immediate financial requirements without any burden on their pockets. You can use a gold loan calculator to determine how much you can afford in EMIs. 

Key tips to keep in mind before investing in digital gold

With numerous online platforms available, you can easily buy and sell digital gold from stockbrokers. You are just a few clicks away from purchasing digital gold. However, follow the underlying tips to avoid mistakes and ensure to make an informed decision.

●  Transparency

Much of digital gold investment popularity stems from the fact that you can buy digital gold at real-time market rates, thanks to the internet. Regardless of which platform you purchase digital gold from, any changes in digital gold prices will automatically reflect on the online platforms. The benefit of it is that you can make an informed decision.

●  No regulator involved

Unlike gold ETFs, where the Reserve Bank of India (RBI) is the primary regulator, investing in digital gold means that there will be no regulator at all. When you buy digital gold, the producer purchases the equivalent amount of gold in your name and then stores the same in a third party’s vaults.

Although a trustee is usually appointed to verify the quantity and quality of the gold purchased by the investor, there is no guarantee that the assigned trustee is truthful about his reports. There is no regulator to check whether or not the trustee is doing the work properly.

●  An added burden of GST

Whenever you buy digital gold from online platforms, you will need to bear a 3% goods and service tax (GST). Furthermore, any gains from digital gold will also be taxed. It is similar to physical gold, gold mutual funds, or Exchange-traded funds (EFT).

●  Holding charges

The holding charges vary from company to company. Online platforms that accept payments through PhonePe or GooglePay may have nominal storage charges. Generally, you will not be charged for the first two years. However, charges will apply if there are less than 2 grams of gold available at the end of two years from the date you purchased the gold, which is about 0.02% per month.

You will also find online gold brokers with no hold charges. It all depends on your research of the market and finding the right place to buy gold. 

●  Delivery and making charges

Another reason digital gold is a popular investment option among investors is the absence of making charges. You will only have to incur the cost of gold at the time of purchase. Furthermore, you will have the option to convert your digital gold into physical gold.

If you prefer to convert your gold into physical gold, you will have to incur delivery fees. As an investor, you will only have the option to convert your digital gold into gold bars or coins. In the case of gold coins, you may have to pay an additional design charge.

●  Investment tenure

The digital gold investment comes with the perk of a holding period. You can hold your gold for a specific period, after which you will need to take the delivery of gold or sell it back. For instance, you will get five years to hold your gold, and if you continue to keep your digital gold beyond the holding period limit, you will need to pay extra charges.

A golden piece of advice would be to ensure you have an active account by doing one transaction at least once every six months. You can do that by either converting your gold into coins or by selling it back.


Digital gold is easily accessible and most affordable. Any individual with a smartphone can purchase gold online. Since there are many platforms to choose from, knowing the above-said tips can help you make an informed decision.

Also, gold is not only an investment option for most, but it is also a way to manage your finances when you do not have the means to, by applying for a gold finance