- by Admin
Digital Gold is a modern alternative to physical gold investments. It is growing as an efficient and economical way to invest in the yellow metal. Experts believe digital gold offers improved portfolio performance because it increases yield in its long-term and liquidity-rich form without credit risk. However, there are still people who are confused between investing in digital gold or physical gold.
In this blog post, we’re going to see the major differences between digital gold and physical gold, and what you should choose for your next investment.
Physical Gold Investments
Many investors prefer to invest in physical gold. The precious metal is purchased in the form of jewellery or gold coins for personal use. Investing in physical gold is more costly and the prices for precious metals vary across states.
For example, physical gold resale value is lower than other similar investment forms. In addition, physical gold has to be secured and stored to regain its value. Keeping it secure is challenging because of the high risk of burglary.
Digital Gold Investments
Digital gold can be purchased online by customers easily and can be kept in insured vaults by the vendor. This can also help overcome all the issues of physical gold purchasing. You can buy gold digitally anywhere as per your convenience.
Digital gold helps eliminate issues of security and storage costs by storing it in a secured vault and protecting it from unauthorised access. The redemption process for digital gold is easy and swift and is also available in physical gold notes and bars.
Digital Gold v/s Physical Gold: What is the difference?
Families have been investing in gold over generations under the assumption that it is the only asset of which the value doesn’t decrease, thanks to its irreversible nature. It is estimated that Indian households own roughly 24,000 tonnes of gold that are valued at $1.12 trillion.
Most householders primarily use gold possessions at home and this is very risky. The government has already imposed a strict limit to the holding of gold. In reality, there are various methods of keeping gold in non-physical form.
Let’s look at the major differences between them to understand which one is better.
|Parameters||Digital Gold||Physical Gold|
|Purity||Its purity is guaranteed as they are 24k gold.||Its purity may or may not be 99.9%.|
|Prices||Prices are uniform across the country.||Prices vary across states.|
|Costing||A maximum of 3% GST is charged on digital gold investments.||Buying gold jewellery or coins in physical form includes 20-30% of total value as making charges.|
|Storage||It is stored in a secured vault in the investor’s name and the chances of theft are nil.||It is usually stored in a locker or at home where chances of theft are high.|
|Liquidity||It can be redeemed easily as coins, bullion, or in cash.||It can be bought from any bank or jeweller. However, it can be redeemed through a jeweller only.|
Digital gold is considered a better option than physical gold as it provides more security and carries low storage costs. If you want to purchase gold just for investment, then buying digital gold is beneficial. Under digital gold investments, both buying and selling are transparent.