Digital Gold- An Easier Sell

14 Mar 2022 , 10:35 AM

For centuries, people across the world have invested in gold. Often perceived to be an unflinching standard of value, gold has been considered a sign of prosperity and riches worldwide. India, too, has been no exception. Apart from being a cultural and religious phenomenon, where auspicious days are linked with the purchase of gold, the yellow metal is often considered a safer investment for the long run, a dependable fallback option for times of need.

Across the Indian society, people start investing in gold as a trusted measure of financial security for the future, either for themselves, their children, or both. The general idea is that when times are tough, the owned gold can be used to secure a loan or sold to cater to the needs of the person or the family. Recent data released by the Reserve Bank of India on sectoral deployment of bank credits shows that gold loans have more than doubled over the past two years that have been fraught by the pandemic and stand at a whopping 65630 crores in 2021. As per data from the World Gold Council , recycling of gold increased during the pandemic and touched 142 metric tonnes, as people across the country resorted to selling their gold to make ends meet.

However, even though people may fall back on selling their gold in times of distress, there are problems faced by the common investor during the selling process.

Accessibility: Much of rural India traditionally invests in gold, according to their means and savings. While selling, these investors might have to travel to a jewellery shop that might not be close to their home or even in their village. There are security and logistical concerns in the process as well.

Buyback Value: Selling gold to the local jeweller is often the most common option for most Indians. The gold or jewellery is measured, and the store determines a rate, which might or might not be as per the latest market rates. Stores also negotiate rates based on quality, and the investors who have purchased the gold locally might not have proof of quality.

Making Charges: In many places in India, investors have little option other than buying gold in the form of jewellery. While crafting gold jewellery, hefty making charges go into the investment amount. However, the customers do not get this amount back when they want to sell the jewellery.

Storage: To store physical gold, the customer must invest in in-house safety measures or get assigned lockers from banks. Access to bank lockers is only available during working hours of the bank, and in times of emergency, the customers might not be able to get the gold at their disposal instantly.

These problems, however, do not exist in the case of digital gold- which from good providers is a quality assured, easily accessible, storage proof way of investing in the precious metal.

Accessibility: Digital gold is always accessible for the investor at the tap of a button. While buying digital gold is easy, similar to online shopping, selling too works the same way and is just as convenient. All the investor needs is a smartphone and a working internet connection.

Buyback Value: Investors can sell their certified quality assured digital gold at the exact market rate at the time of sale. Digital gold sellers provide real-time information on market rates that can also be cross verified before the sale.

Making Charges: Digital gold can be bought as is, and the investor doesn’t need to make jewellery out of it unless so intended. Making charges can be avoided, and the customer can receive gold of a value that is commensurate with their investment.

Storage: Gold purchased by the investor is safely stored in a high-security vault by the seller. This removes the hassles of storage, security, and transport.

Investments and income should be planned well and in advance to ensure the investor or the family never face financial hardship serious enough to fall back on their invested gold. However, in case the situation arises, digital gold is generally considered an easier more convenient sell.

The author of this article is Ashraf Rizvi, Founder, and CEO, Gilded

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com