How safe is it to buy digital gold?

Category: Finance


What is digital gold? 

Digital gold is gold that can be purchased online. These are called gold Exchange Traded Funds (ETFs) and are traded in the marketplace just like how stocks are traded. What’s more interesting is that you can purchase gold for as little as Rs.100 and gather your holdings in a secured digital vault. This investment can be sold with ease at any time from anywhere at the click of a button. 

Is it safe to buy digital gold? 

Buying gold online is safe in many aspects. Firstly, all companies that provide gold ETFs have to be registered and are regulated by the government. Needless to say, they have the most secured servers that are virtually impossible to hack. Furthermore, it is secure in the sense that you cannot be duped in terms of the gold price and the quality of the metal. 

How to invest in gold ETFs 

Gold ETFs, similar to stocks, are traded on the NSE or cash market and can be bought and sold in the market place. You will need to create a trading account along with a demat account. An investor can invest in as little as 1 gram of gold and can be bought in instalments like a SIP or in lumpsum. 

Steps to follow to invest in gold ETF 

  • Open a demat account and a trading account with a reputed stockbroker. 

  • Use the credentials provided by the stockbroker and log in. 

  • Choose from a specific ETF you want to invest in. 

  • Choose a specific amount you wish to purchase and click ‘Buy’. 

  • The money will be deducted from your trading account. 

  • The ETFs will now be credited to your account. 

  • You will now be able to trade these ETFs. 


Even though there are no entry and exit charges in buying digital gold, they do levy two other costs. Firstly, you will have to pay the stockbroker for managing the funds. This charge, however, is lower than what most mutual funds company charge. Secondly, a brokerage charge will have to be paid to your stockbroker for every transaction made. This will be a percentage of every transaction and is a nominal fee. Generally, this charge will be between 1 – 2%. 

Advantages of investing in ETFs 

  • There is a transparency in the pricing, and one cannot be duped while investing online in gold. 

  • There is no need to worry about the quality of gold as 99.5% pure gold is the grade of gold offered online. 

  • Digital gold is cheaper that purchasing gold from a retail outlet. Additional costs such as making fee, storage fee, etc., can be avoided. 

  • Purchasing gold online is affordable. Unlike purchasing the metal from jewelers, one can purchase the metal online for as little as Rs.100. 

  • The process of liquidating the asset is fairly simple and can be done almost instantaneously from anywhere in the world. 

  • Digital gold is more secure than physically storing it. 

Gold is a good option for investment, and India has been one of the largest consumers of the metal for years now. However, buying gold the traditional way in the form of gold bars, coins, or jewelry has its drawbacks. Whether it is storing the metal, having to worry about it being stolen, making additional investments towards a vault, levying making charges, it is a burden to own a physical form of the metal. Another advantage of purchasing digital gold is that the pricing for the same is transparent and the grade of the metal sold online is excellent. This is the reason that many experts suggest investing in digital gold.