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| February 2, 2023

What Is Digital Gold and How Does It Work?

Indians are some of the biggest consumers of physical gold. For ages, the amount of gold one possessed was viewed as being directly proportional to one’s prosperity. Gold, as an investment, has always been viewed as future security. However, holding on to physical gold articles came with its own set of challenges. One had to be careful about securely storing the gold as well as authenticating the purity of the purchased gold. That’s the reason we pay extra for renting out safety deposit lockers. And in the event of a financial crisis, selling off gold to generate funds is also a daunting task. You have to find a genuine buyer, negotiate for rates and physically hand over the gold. Not anymore. The world is changing and technology has made our lives digitalized. Now, you can buy 24k or 99.5k gold online through digital companies without having to physically hold the gold. And, the minimum buy or sell value is just one rupee.

What is Digital Gold?

Digital gold is a virtual way of buying and investing in 24k or 99.5 percent purity gold without having to physically hold the gold. New-age fintech companies are using technology to provide their customers with a delightful experience. Investors looking to invest in physical gold can now do so conveniently online. The company providing this service acts as the intermediary that buys the physical gold on your behalf and stores it in insured and secured vaults.

Digital Gold is an advancement on the traditional way of buying gold. The entire process, from application to allocation, is completed conveniently and discreetly from the comfort of your home. And the most attractive feature is that you can buy gold for as low as Re 1 which isn’t possible in the traditional way of purchasing gold.

Comparison between Traditional Way of Gold Purchase and Digital Gold

Traditional Gold Purchase Method Digital Gold
Investment Requires a large sum of money for making jewellery, coin, bar or bullion purchases. Investment Requires a large sum of money for making jewellery, coin, bar or bullion purchases The minimum investment starts from as low as Re 1.
Gold Price The price per gram of gold could vary with different jewellers. There's no ambiguity in gold prices.
Authenticity Quality and purity of gold could vary for different jewelers. Quality and purity is guaranteed. Digital gold is always 24k or 99.5% pure gold.
Storage Gold items have to be stored either at home or in a bank locker. The digital gold company stores the gold in highly-secured vaults.
Security Threat of theft, robbery or damage. The stored gold is 100% secured.
Charges Buying gold articles incur making charges while on selling the gold, making charges etc are deducted from the final price. Additionally, there could be locker rent charges. In some cases, there could be making or storage charges levied.
Liquidity Selling of gold articles could be cumbersome and time-consuming. Digital gold can be sold at real-time market prices whenever desired.
Convenience May require physical visits to a jewellery store and then transporting it back home. This gold investment is 100% online.

How can you buy Digital Gold?

At present, you can buy digital gold from several mobile e-wallets such as Paytm, Google Pay, and PhonePe. Brokers such as HDFC Securities and Motilal Oswal also have an option for digital gold investing. The actual gold that is purchased on behalf of the investor is provided by:

  • Augmont Gold Ltd.

  • MMTC-PAMP India Pvt. Ltd. (A joint venture between state-run MMTC Ltd. and Swiss firm MKS PAMP).

  • Digital Gold India Pvt/ Ltd with its SafeGold brand.

Disadvantages of a Digital Gold Investment

Buying digital gold is a fairly new concept in India. Despite the many obvious benefits, there are certain disadvantages too.

  • The gold investment doesn’t generate any interest.

  • On most platforms, the amount of digital gold investment has been capped at Rs 2,00,000.

  • Lack of regulatory bodies and guidelines.

  • Some platforms offer only a limited storage period.

  • During the delivery of digital gold, holding companies charge a small management fee for holding the gold for you.


Digital Gold is a smart gold investment that does away with many issues associated with physical gold purchases. Furthermore, it is an excellent gifting option too!

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