Why Digital Gold May Be Worth Exploring As The Yellow Metal Prices Scale New Highs

Although gold coins, bullion and jewellery are the preferred choice in India, gold’s astonishing price rally over the past few months has made it beyond the reach of most buyers.

Gold prices climbed to a new record high on the Mumbai-headquartered Multi Commodity Exchange (MCE) this week, piggybacking on a potentially crushing banking crisis in Europe and the US, as investors returned to haven assets for fear of more trouble in the financial system.

In intraday trade on MCE on Monday, gold prices soared to around Rs 60,000 per 10 grams for the first time, suggesting the mad rush of buyers for the yellow metal to duck current volatility.

Amid this, a few companies offering digital gold or DigiGold see a silver lining in their business, hoping for a major sales boost with their products and services in the coming months.

And they have a convincing reason.

“People can buy digital gold for as low as Re 1, and the price is the same across India. They can buy or sell them online at market-linked rates, with a quality backed by physical gold,” says Renisha Chainani, head of research at Augmont Gold.

“You also have to deal with the security issue while purchasing physical gold, which costs more. DigiGold is 100 per cent secure, stored in world-class safe vaults with no risk of theft,” she adds.

Digital gold’s popularity soared during the Covid-19 pandemic when people looked for online avenues to purchase gold and other things. While there aren’t many big companies offering digital gold in India, a few, like Augmont, have big plans.

Augmont provides the lowest rates to buy DigiGold, says Chainani. The investor can open a digital gold account with Augmont directly or through its partner platforms to invest in gold.

Augmont owns its vaults, which are insured, to store gold on behalf of the customer. They only need the Internet and mobile banking access to purchase gold digitally anytime. It has also tied up with fintech firms, E-wallets, and stockbroking companies, among others, to sell DigiGold.

One such platform is Spare8, which uses Augmont to store and purchase gold. When people buy digital gold through the Spare8 app, they purchase physical gold held in the Augmont vaults.

The company says it has created one of the fastest customer onboarding processes and leverages Unified Payments Interface (UPI) 2.0 to drive growth.

Ronit Harisingani, the CEO and co-founder of Spare8, sees a growing trend in digital gold investment. Convenient investing options, he says, have not only made it easier for investors to diversify their portfolios but also motivated those who were initially scared to invest due to high costs and risks. Consequently, “the micro-investment industry has seen a significant shift as more investors look for low-cost and flexible options to invest in,” says Harisingani.

He adds that “With the increasing popularity of digital gold and the growing demand for alternative investment options, the micro-investment industry is poised for significant growth.”

What Digital Gold Companies Offer

• Buy or sell DigiGold online 24x7, 365 days a year.

• Purchased gold is stored in safety vaults and is 100 per cent insured.

• Augmont vaults are backed by IDBI Trusteeship Services and accessible 24x7.

• Physical delivery of the gold to customers’ doorsteps.

• Opportunity to invest in gold for as low as Re 1.

• Can be used as collateral for online loans.

• Comes with a purity of 24K or 99.5 per cent.

• Exchange DigiGold for physical jewellery, gold coins, and bullion.

How To Purchase

After logging into the website or the app and filling in the details, perform the following steps:

• Enter the amount you want to spend or mention the quantity in grams.

• Choose a payment option: net banking, UPI, credit/debit cards, wallet, or cash.

• After the payment, the account will be credited with the gold.

• Calculate the live market price to buy or sell gold.

The best part of buying digital gold could be that it eliminates the concerns over storage, security, and purity, which are guaranteed.

Chainani explains: “The purchased gold is stored with a custodian on a consolidated basis daily. IDBI Trusteeship Services Limited monitors the vaults, and the trustee confirms the balances with the custodian each quarter and reconciles the amounts with the customers’ balances.”

She says that misconceptions about digital gold, such as it is not pure and extensive documentation required, etc., are false as DigiGold is a 24K Hallmarked Gold.

Technological innovation is also favouring the industry’s growth. For example, Augmont and Spare8 offer real-time market updates and instant access to account information.

Spare8 believes more people are buying gold due to economic uncertainty and inflation. Consequently, it says gold demand as a safe-haven asset will continue growing.