Gold remains one of the most popular investment options for many people, especially during festivals like Diwali and Dhanteras. There are a variety of ways to invest in gold. Purchasing physical gold in the shape of coins, bars, or jewelry is by far the most popular method in India. Digital Gold is another alternative, as is investing in gold through Sovereign Gold Bonds (SGBs) or Gold ETFs.
Gold can be purchased in digital or physical form, allowing consumers to keep the golden metal in their own possession. In the case of SGBs and ETFs, the buyer/investor does not receive physical gold.
Because most Indians want actual gold in their hands when they buy during Dhanteras, we examine if digital gold is as good as real (physical) gold and what the best option to invest in gold during Dhanteras would be.
The Covid-19 pandemic, according to a World Gold Council (WGC) research, affected Indian gold sellers’ brick and mortar business model. The epidemic acted as a stimulus for increased sales through internet outlets. However, India’s online gold sector is still in its infancy, accounting for about 1-2 percent of total gold transactions by value.
Digital Gold vs Real Gold
Unlike physical gold, one can start investing in digital gold with as little as INR 1 and go up to Rs 200,000 every day. To obtain physical gold, the buyer must purchase a minimum of 1 gram of the metal. However, both means of purchase are taxed at the same rate of 3%.
In the age, where alternative investments are becoming increasingly popular, gold remains one of the safest things to invest in. According to Kulkarni, gold is always an excellent method to diversify your portfolio. But only invest a modest portion of your portfolio in it (less than 10 percent of the total portfolio).
However, Kulkarni suggests instead of digital or physical gold, investors should consider SGBs and Gold ETFs as investment options to attract better returns.