Should you prefer physical gold or digital gold?

Juliet D'cruz

Should you prefer physical gold or digital gold?

One of the biggest investments that Indians make is gold investment. This investment can be in several forms such as in gold biscuits, coins, bars, and jewelry. On every auspicious occasion, Indians like to purchase gold. They consider yellow lustrous metal as a precious investment because it is easier to store. People can easily buy and sell gold whenever they require a big amount of cash. At present, investors can use their money in purchasing gold both online and offline. With the growth of digitalization in the world, people are now buying digital gold. It has become a popular trend among the young masses. 

The rate of gold varies from place to place. Digitalization has offered us a quick search option that allows us to know about things at a click of a button. To be able to make the investment at the right time, you must keep track of the gold prices daily. For instance, you can search for the Gold price today in Coimbatore or any other city/country you reside in. In this article, we will understand the difference between physical gold and digital gold. We will also get to determine which one of these is a better investment option.  

Things to keep in mind 

Firstly, it is important to understand what digital gold investment is. Digital gold is a precious alternative to physical gold. It can be purchased from several websites and apps in any part of India. Digital gold is also an efficient and cost-effective investment option. Digital gold’s each unit has 24K (99.9%) purity. Beginners can start investing in gold with INR 100. The buying and selling of digital gold take place online at the current market prices. This ensures transparent transactions and helps in winning the trust of the investors. Investing in gold also does not involve any carrying costs and additional storage space. Investors do not need to worry about their gold storage as the trading companies offer a safe vault to each of them. 

Whenever a unit of gold is bought online, the trading companies go through the gold purity and then store it in the investor’s vault. After the investor sells their unit of gold, the company removes it from their vault. Upon redemption, the investors can also take gold physically delivered to them. But this physical delivery has its own cons. The trading platforms cost management fee, insurance and storage costs of 2-3%. But the digital gold platforms lack a regulatory authority that will work for the security and interests of the consumers. The digital gold investment is not a passive income for the investors. People regard digital gold as more cost-efficient and convenient than physical gold. Another type of digital investment is sovereign gold bonds (government issues them) and the mutual fund (ETF).

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Benefits of digital gold investments 

Some of the benefits of digital gold investment are as follows:

  • Beginners can start investing in digital gold with a small amount of money. There are no minimum purchase limits or restrictions. 
  • The quality of the digital gold will not be compromised. 
  • This type of gold can be redeemed easily and quickly. 
  • The digital gold is secure and stored in the investor’s vault.
  • Investors can also track their gold investments through several websites or apps.
  • It helps in portfolio diversification.

Knowing more about physical gold investments 

Let us understand what physical gold investment means. Investing in physical gold is regarded as one of the most favored investment alternatives in India. The demand for this yellow lustrous metal is only increasing day by day. People can purchase physical gold from various shopkeepers, jewelers, and banks without the involvement of any intermediary. Investors are advised to keep all the receipts of gold purchases safely for future income tax purposes. Buying physical gold is a bigger investment than digital gold. 

Everyone in the world accepts gold as a precious and expensive metal. Hence, it can be easily liquidated anywhere. But the price or rate of gold varies among dealers. The resale value of physical gold is much lower than any other type of gold investment. Physical gold also has some drawbacks such as the carrying cost and storage cost being higher along with a potential risk of theft. 

Benefits of physical gold 

Some of the benefits of physical gold investment are as follows:

  • Gold is the most prized and desired metal in the world. 
  • This investment is considered a security against inflation.
  • The physical gold does not lose its intrinsic value. 
  • People can take loans against their physical gold.
  • They can also pass it on to generations after generations.
  • The value of gold does not depreciate with time.

People who wish to wear gold jewelry must opt for a physical gold investment. Otherwise, digital gold is a better option as they are safer and have no extra storage costs involved. Investors must determine the pros and cons of both types of gold investment before making any decision. 

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