Mumbai42 minutes ago
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SEBI has recently advised investors to stay away from digital gold. It is sold on online platforms like Paytm, Google Pay, Phone Pay.
These are neither considered securities nor commodity derivatives. That is, if the platform defaults, SEBI will not be able to provide any protection.
In such a situation, the question is, what should those who have already invested in digital gold do now? Apart from digital gold, what are the other options for investing in gold? Let us know in this story…
What is digital gold and how did it start?
Digital gold is the digital form of gold. You can buy it through apps and the company keeps the same amount of physical gold in the vault. You can also buy in installments like SIP.
It was launched in India by Augmont in 2012. The company observed that people like gold, but it is difficult to buy it in small amounts. So they launched fractional purchases from Re 1. Gold is stored in third-party vaults and there is also a delivery option.
Augment was followed by MMTC-PAMP, a joint venture between government-owned MMTC and Swiss MKS PAMP. It is India’s largest gold refiner and custodian. It partnered with companies like PoTM, PhonePe, Motilal Oswal, due to which it became popular.
SEBI and RBI cannot regulate it
SEBI does not consider it a security or commodity derivative. At the same time, RBI also does not consider it as a banking or deposit product. Therefore it is difficult to regulate it.
This business is currently running on the trust of the platform. In 2021, the digital gold market was Rs 5,000 crore, which has become Rs 13,800 crore.
What should investors do after SEBI’s warning?
If you already have digital gold then there is no need to panic. Right now SEBI has only given a warning. You can still take delivery of your GoLad.
Or you can sell it and shift to a regulated product. If you trust the platform then you can keep it, but the risk will be yours.
Where can one invest now instead of digital gold?
If you want to invest in gold in a safe way then there are three safe ways…
1. Physical Gold: Choose biscuits-coins, avoid jewelery
Physical gold means buying gold biscuits, coins or jewellery. But when buying jewellery, there is a 10-20% making charge. Jewelery does not even include 24 carat pure gold. Therefore, if you want to invest in gold then you should buy biscuits or coins.
2. Gold ETF: Easy trading like stock market
In Gold ETF, gold can be bought and sold like shares. These are traded on NSE/BSE. In this, the price increases and decreases according to the price of gold prevailing in the market. To buy it, it is necessary to have a demat account. There is no need to worry about theft or purity in this.
3. Gold Mutual Funds: Invest in SIP or Lumpsum
In this, fund managers invest money in gold ETFs and gold related stocks. These are not traded on NSE or BSE like ETFs. Demat account is not required for this. Like other mutual funds, investments can be made in both SIP or lumpsum modes.
More cost efficient than digital gold
These three options are also more cost-efficient. Because in digital gold, more money has to be paid to cover storage, insurance, platform margin. On top of that, 3% GST is also applicable on purchases. However, while keeping physical gold, you will also have to take care of safety. Whereas to invest in ETF, a demat account will be required.
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