Digital Gold – Why and When?
Gold In India
In India, gold has always been the most beloved metal for ornamental, gifting, investment and purchase during auspicious occasions. With 136.6 tonnes of jewellery consumption in Q4 of 2019, India has become the biggest consumer of gold.
Moreover, gold is also considered as a favourable option from the investment point of view. From jewellery to physical gold – coins or bars, Indians cannot get bored of it. One can invest in yellow metal in many forms like coins, bars, gold ETFs, SGB schemes, gold funds, etc.,
However, we don’t consider gold jewellery as an investment option because it covers so many non-refundable charges like making charges, storage cost, etc., which ultimately makes it a liability rather than an asset.
Besides these traditional ones, we have a new way to invest in the yellow metal – Digital Gold. Yes!! Digital. Which means you can invest in gold through a few clicks anytime and anywhere.
Post COVID-19, the world seems to have taken a definitive turn towards digital in all spheres, and digital gold is now the smarter way to invest in gold.
What’s even better, is that it offers you a way to purchase, sell and accumulate physical 24k pure gold in small fractions, anytime and anywhere through a variety of apps or platforms. With this innovation, gold has become more functional, approachable and efficient.
In simpler words, digital gold is a method of investing in physical Gold without needing to hold the gold physically yourself. This means you’re free from the responsibility of its security and maintenance. All you have to do is invest, sit and relax.
So what are the compelling reasons you should consider?
In short, it’s a hassle-free and less time-consuming method to invest in gold. You neither have to worry about its security nor its purity. Besides which, you have the freedom to manage your investment as you wish to – i.e. sell or take delivery at any time. Digital Gold combines the convenience and speed of the internet with the safety and security of traditional gold purchases.
When Should You Invest In Digital Gold?
Investing in digital gold is as simple as buying other things online. But to find the right answer to ‘When You Should Invest?’ is a tricky one.
Here are a few points which might be helpful for you: –
1. Ready To Wait
Investment in gold is not for impulsive investors. One needs to be a little more patient while buying gold. While market fluctuations may, at times, lead to short term gains, it is prudent to use it as an instrument to fulfil your long-term goals. Always remember even when the price of the metal fluctuates more than unusual, it’s better to be calm and not panic and clear your gold holdings by selling. Ideally, when the price decreases you should even buy more. Thus, you can consider digital gold when you’re planning for your long-term financial goals.
Luckily, companies offering digital gold like SafeGold offer free storage for up to 5 years, with options to store for even longer at a small fee.
2. Save before You Spend
“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffett
The most successful investor – Warren Buffet, believes that the first thing one should do after receiving the monthly paycheck is to allot a part of it for saving. No matter how small the amount is. Many other investors also believe that one should invest in small fractions as frequently as possible. Since digital gold allows you to buy 24k pure gold as little as worth Rs.100/- only, you should have no budget excuses to say ‘No’ to it. As per your convenience, you can opt for monthly or weekly SIP plans of Rs. 100/- or Rs. 500/- or Rs. 1000/- and so on.
This way the set amount from your paycheck has been allocated for your financial goals with no extra burden and you build the discipline for saving in small parcels.
3. Be An Opportunist
There are many reasons due to which the price of gold fluctuates. Be it a difference in demand & supply in the market, change in interest rates, change in institutional buying, geopolitical tensions, and many more. Thus, one has to be a keen observer and a proactive decision-maker to get the best possible returns.
Irrespective of fluctuation in the prices, its value will never fall fully due to its limited natural supply. As a result, you can purchase gold with assured returns in the long-run. In this case, if you buy gold from an authentic seller like SafeGold, you can monitor the value of gold holdings anytime and anywhere.
4. Black Swan Appears
Black Swan events like COVID-19 are rare unexpected events which negatively affect the economy. Since gold and the stock market bear some inverse correlation, gold often shines brighter when the stock market is negatively impacted, such as during an economic crisis. Last year due to uncertainty and challenges brought on by COVID, the equity market was volatile, real estate was choked, and even debt markets were pushed into turmoil because of weak consumer sentiments and restricted liquidity in the market. But on the contrary, the value of gold rose amidst all challenges of health and economic crisis.
During a lockdown when the access to shops to buy physical gold was restricted, digital gold saw a 40%-50% rise in demand due to the ease with which investors could purchase it, even amidst restrictions.
Conclusion
In comparison with other conventional ways, digital gold proved to be a better investment option than others. Product benefits such as safety, storage cost, low ticket size and accessibility make it a winning choice year round, but especially in times such as these.
Note: This article is first published on IBJA TIMES