Digital Gold Investment In India: How Safe And Profitable Is It?

Gold has always been a trusted asset for Indian investors, both as a hedge against inflation and a symbol of wealth. In 2024 alone, India saw over $18 billion worth of gold investments, with nearly 10% coming from digital gold¹. This shift reflects a growing preference for tech-enabled investing, where buyers can purchase, sell, and store 24K gold digitally with just a few taps via UPI-integrated platforms.

But is digital gold really safe, and can it offer good returns? In this blog, we explore the pros, cons, safety, and profitability of investing in digital gold in India.

What Is Digital Gold And How Does It Work?

Digital gold is a new method of investing in pure 24-carat gold (99.5–99.9% purity) without holding any physical bar or coin. 

Here is how it works:

1. Purchase: You can start investing in digital gold with as little as INR 1, INR 10, or INR 100, depending on the platform. It is easily accessible through mobile apps, investment websites, and fintech platforms offering gold investment options.

2. Storage: Every time you buy digital gold, an equivalent quantity of 24K physical gold is purchased and stored securely in insured vaults by reputed custodians like MMTC-PAMP, Augmont, SafeGold, or Brink’s. The gold is fully backed and allocated, and your holdings are displayed in grams (up to four decimal places) in your account.

3. Ownership: The digital gold remains fully owned by you. Most platforms maintain an audit trail and assign the gold in your name, with trustees ensuring transparency and safety. This makes digital gold a trustworthy and traceable asset.

4. Redemption or Sale: You can sell your digital gold anytime, and the proceeds are usually credited to your bank account within 1-3 working days. Alternatively, you may opt for physical delivery in the form of coins, bars, or jewellery, subject to minimum quantity thresholds like 0.5?g or 1?g and applicable making or delivery charges.

Let us take an example to understand this better-

Rajesh wishes to invest in digital gold:

1. He opens an app and purchases INR 500 at INR 5,000/g ? credited with 0.1000?g.
2. The platform keeps this in a vault, insured and audit-backed.
3. After 6 months, the price increases to INR 5,500/g.
4. He sells 0.1000?g digitally ? gets INR 550 (deducting platform fees, within a few days).
5. Otherwise, he may ask for delivery of 0.5?g gold coins later on if required.

Why Millennials Are Choosing Digital Over Physical Gold

With gold prices rising 21–25% between 2024 and mid-2025, many millennials shifted to digital gold for its ease of access, low entry barrier, and seamless online tracking, making it a preferred alternative to physical gold²

1. Convenience & Accessibility: Millennials are accustomed to smartphones and UPI. Purchasing gold is as simple as opening an app and pressing a button, making no visits to jewellery stores.

2. Real-Time Pricing & Transparency: Digital gold websites provide real-time pricing, reflecting market rates minus hidden markups or making charges. They foster trust by providing transparency.

3. Micro-Investing Made Easy: Digital gold investment apps facilitate micro-investing of as little as INR 1–INR 10, ideal for students and novice investors.

4. Zero Hassle Insured Storage: Your gold is stored in safe, insured vaults by partner custodians with no fear of theft or locker rental. Vaults are periodically audited, and the holdings can be exchanged into physical gold or cash at any time.

5. Liquidity And Flexibility in Emergencies: You can sell gold at any time at market prices, and funds are credited within a matter of days. It can be used for emergency funds for short-term objectives, holiday vacations, etc.

Also Read: 22 vs 24 Carat Gold: Which Is Better 

Digital Gold Vs Physical Gold Vs ETFs

You can invest in gold digitally through the apps, invest in digital ETFs, or buy physical gold directly. Here are the differences: 

Pros And Cons Of Digital Gold 

Digital gold adds modern convenience to a time-tested asset, but investors should weigh both its benefits and limitations before investing.

Better Alternatives: Gold Bonds, ETFs & Fixed-Yield Options

Digital gold offers ease and accessibility, but it's just one of many gold investment options, each with its own benefits and trade-offs.

1. Sovereign Gold Bonds (SGBs)

SGBs are launched by the RBI, and they receive 2.5% p.a. interest, which is paid semiannually. Maturity is 8 years with an option for premature redemption after 5 years. Capital gains tax is exempt on being held to maturity, providing a great benefit. Though these provide interest income, tax relief, and sovereign guarantee, they come with a 5-year lock-in period.

2. Gold ETFs

Gold Exchange Traded Funds (ETFs) track the domestic price of physical gold. They hold physical gold, and each ETF unit corresponds to a specific quantity. These are traded like shares. It provides similar liquidity to electronic gold, but it is held in a demat account. It is suitable for investors who are accustomed to trading in the stock market.

3. Fixed-Income Alternatives

Besides gold, fixed-income options are present. Grip Invest, which is a SEBI-regulated platform, has various choices such as corporate bonds with flexible tenures and high-yield FDs. It is ideal for investors looking for stable income and capital security, especially in low gold price volatility.

Also Read: Gold Bonds vs Gold ETFs

Conclusion

Digital gold offers a convenient and flexible way to invest in 24K pure gold without the burdens of physical storage. It ensures instant liquidity, transparent pricing, and ease of access through digital platforms, making it ideal for first-time investors and millennials. However, since digital gold is not regulated by SEBI or RBI, it may lack the safety net and long-term consistency offered by other investment options. If your goal is wealth preservation, passive income, or low-risk returns, fixed-income alternatives like bonds or SDIs may be better suited. 

Login To Grip Invest to explore curated, SEBI-compliant opportunities across these asset classes, starting from as low as INR 1,000.

FAQs On Digital Gold Investment

1. Is digital gold safe in India?
Yes, digital gold is relatively safe if purchased through credible platforms. Your investment is secured by 24K physical gold held in insured vaults. But it's not SEBI or RBI-regulated, so opt for platforms with transparent audits and security norms.

2. Who are the top providers of digital gold?
Some of the best digital gold providers in India are:
1. Tanishq DigiGold
2. PhonePe
3. Paytm
4. Google Pay
5. MMTC-PAMP India Pvt. Ltd

3. Is digital gold taxable?
Yes. Taxation of digital gold is the same as physical gold:
Short-term (<2 years): Gains are taxed according to your income slab.
Long-term (>2 years): 12.5% tax.Also, 3% GST is charged at purchase, which is non-refundable. Digital gold does not provide interest income, unlike SGBs.

References:

1. DD News, accessed from: https://ddnews.gov.in/en/indias-gold-investments-surge-60-to-rs-1-5-lakh-crore-in-2024-report/

2. Financial Express, accessed from: https://www.financialexpress.com/market/commodities/actual-gold-too-hot-to-handle-buyers-turn-to-digital/3888485/

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