Everything is going digital and the yellow metal is no different. Digital gold is soon becoming the favoured method of investing in the metal, especially among millennials with investments rising year-round. This is in stark contrast to traditional gold which saw a rise in purchases only during the festive season.
So why is digital gold the new trend? Experts say that digital gold is considered safer and less expensive than real gold and there is easy liquidity which is another factor that attracts investors. Furthermore, digital gold allows the purchase of small sachets for a fraction of the price of physical gold. These factors have seen a lot of support for digital gold and the buying risen by nearly 70 percent compared to the last year.
However, as more investors set their sights on digital gold, the absence of regulations could become more pronounced. Currently, digital gold is not regulated by the Securities and Exchange Board of India (SEBI) or the Reserve Bank of India (RBI) and there is no method to check if it is actually backed by physical gold. The asset class could soon be regulated however with the SEBI set to introduce measures. So what does the space need and how can you decide what form of gold is best for you to invest in? Somsundaram PR, MD of World Gold Council, Gaurav Mathur, Founder of Safegold and Vikas Singh, MD and CEO of MMTC PAMP discussed this further.
“During COVID-19 it rose sharply and even the gold held in the vaults have risen. There is a lot of popularity for this form of buying and selling gold. As of now, it is unregulated but within the market, there are guidance notes which are driving the participants to observe. It is a very transparent way of buying gold and it is also one of the most recently popular ways of buying gold,” said Somsundaram.
“Across platforms, we see ticket sizes, which range from maybe Rs 100 per purchase to going up to Rs 10,000-15,000 during festival season. But prevalent ticket sizes are by and large the Rs 1000 aggregate bracket. This is the fastest-growing product in the category. This is also the one which is the most preferred way of engaging with any description that you may wish to give the customer,” said Singh.
“It is picking up quite strongly, we see very strong interest from consumers even with relatively small balances to go and exchange their digital gold balance for jewellery and we have got almost 2,000 partner outlets where you can go and exchange it. So from large branch to small standalone shops, that is very popular,” Mathur further mentioned.
For the entire discussion, watch the accompanying video.