When comparing physical and digital gold, it's important to consider what's most important to you as an investor. Digital gold offers superior liquidity, value and security, but some investors will always prefer to have their gold within reach. Both digital and physical gold have advantages and disadvantages. If you only want to buy gold for financial purposes, you can buy digital gold instead of physical gold.
Digital gold, on the other hand, is not regulated and has a time limit on how long it can be held digitally. Digital gold adds an additional layer of security. Physical gold is traditionally considered a “store of value”, providing security and protection. However, there is always fear and risk of physical loss or theft.
Gold is considered a safe haven in terms of investment and there are several ways available to invest in the precious metal, including digital gold and physical gold. Experts say that gold also improves overall portfolio performance by generating long-term returns and providing liquidity without credit risk. Digital gold is an alternative to physical investment in gold and, according to experts, has proven to be the most efficient and profitable way to invest in the yellow metal. A gold ETF works as a passive investment tool based on the exchange rates of gold, which is traded on stock exchanges.
This means that the investor needs a demo account, which is not necessary to buy or sell digital gold. Both options are backed by physical gold, but selling a gold ETF only provides the cash equivalent. In terms of cost, buying digital gold generates 3% GST on each purchase, while ETFs and funds involve annual charges of 0.5 to 1%. The agent sells the gold at the current market price and deposits the amount into the investor's account.
Only the three declared companies are legally allowed to sell gold and buy it back from the customer on their platforms. As a result, the investor suffered theft and storage problems, reducing his purchases of gold. You can redeem your accumulated possession in the form of coins, ingots or jewelry, or you can sell it back to the seller at the current gold rate. Digital gold is a tool for buying and selling pure gold in its digital form at current market prices.
Once again, digital gold involves zero storage costs: you keep it in your digital wallet and your supplier keeps it in a secure vault. In the case of digital gold, profits from investments in gold held for less than three years are subject to taxation at fixed investor income tax rates. But is digital gold a financial product? How does it compare to gold exchange-traded funds (ETFs)? Is it safe to invest in it? Mint gives you all the answers. Portals such as Paytm, Groww and Gpay, together with jewelers that offer digital gold as an investment option on their platforms, have essentially partnered with these entities.
Investors can easily buy physical gold at any bank or jeweler, but it can only be redeemed through a jeweler. The gold you buy is backed by physical gold that is stored under your name in a certified vault. Banks also establish requiring people to invest in fixed deposits (FDs) as a condition for allocating a locker in addition to renting lockers, increasing the cost of holding physical gold. Later, you can choose to receive this digital gold in physical form at your address or even sell it digitally without any additional cost.