Published: 08 Apr 2020

Digital gold

What is digital gold?

A modern investment option, digital gold represents mass units of gold bought and stored in an electronic (digital) form. This 24 karat investment-grade gold can be purchased through various internet banking and mobile wallet services. Once bought, the gold is stored in secure and insured vaults.

How does digital gold work?

Every purchase of digital gold is made as per the current day’s price of gold, the value of which gets added to your digital gold balance. You can buy gold by weight in grams or by an amount in rupees. The minimum limit is usually 1 gram and 1 rupee, respectively. Digital gold is available on mobile e-wallets such as PhonePe, Paytm, Google Pay, MobiKwik and more and on bank apps and websites. These apps and websites provide a platform for leading refineries and metal trading companies such as SafeGold, MMTC PAMP, Augmont etc. to get listed and sell gold digitally. Once you invest in digital gold online, the equivalent amount of physical gold is securely stored under your name in a vault. When you want to redeem your gold, it is removed from this vault and delivered to your doorstep in whichever form you choose. There needs to be a minimum amount of digital gold in your account for this to be possible, and this amount varies across platforms. Digital gold can also be used as collateral for an instant online loan.

Key advantages of investing in digital gold

  1. Flexible investment amounts: There is no purchase restriction with digital gold. Most platforms let you make a purchase of as low as Rupee 1 or as less as 1 gram.
  2. Quality assurance: You are assured of a purity guarantee of 24 karat with fineness starting from 99.5%, along with the authenticity of legally procured gold.
  3. Transparent, real-time pricing: Gold price for digital gold is linked to real-time market prices. The apps offering digital gold will display the per gram price of 24 karat gold, inclusive of duty and exclusive of GST.
  4. Redemption as coins, bars and cash: Digital gold can be redeemed as coins and bars that are delivered to your doorstep in tamper-proof packaging. You can also get the cash equivalent of the market price of your digital gold credited to your bank account.
  5. Redemption as jewellery: The seller from whom you buy the digital gold will let you pick an item of jewellery (equal to the value of the gold you have accumulated) from its partner jewellers.
  6. Safe storage: The responsibility of insuring your digital gold and keeping it safe lies with the seller, who ensures it is stored in a highly secure vault. This eliminates any risk of loss or theft.
  7. Easy to track: Every transaction you make is tracked in your account history for you to access whenever you need it.
  8. Safety of transactions: All the parties involved in digital gold transactions are registered companies and closely regulated. The World Gold Council has introduced several requirements that all Internet Gold players must fulfil.

Buying digital gold

  1. Complete your KYC formalities before the transaction. Enter proof of identity, proof of address and bank details into the chosen app or website.
  2. The prevailing gold price and the names of the vendors are mentioned on every app/e-wallet and frequently updated. You can verify the correct price on the Price page of MyGoldGuide.
  3. Most mobile wallets have daily and monthly transaction limits. Check the same before the transaction.
  4. If your transaction amount exceeds Rs 2 lakh, you will have to submit your PAN details.

Redeeming digital gold

  1. If you choose to redeem your gold as cash, the accumulated digital gold amount can be sold back to the same platform according to prevailing gold prices and the money will be transferred to your bank account within 72 hours.
  2. You will need to maintain the minimum quantity of gold in your account that the app requires. This amount will vary from app to app.
  3. Provide a delivery location basis which the delivery fee will be calculated. Apart from your registered address, the delivery may also be available at specific approved jewellers and distributor branches.

Not all jewellery pieces will be available to be redeemed- make sure to check what is covered by partner jewellers before you buy/redeem your gold. You will need to pay the making charges depending on the weight, make and design of the item you choose.