Digital Gold Vs Physical Gold

Digital Gold Vs Physical Gold – Which is Better?

Gold is an asset that has fascinated Indians for centuries. Indians use gold in all forms, like ornaments, coins and biscuits. Gold has a unique, indestructible structure, which never loses its value. With the world shifting rapidly towards digitisation, gold is also becoming popular in its digital form. Investors can easily find the gold selling price today and can sell their digital gold online.
Digital gold has as an additional layer of security. Physical gold is considered as a ‘store of value’. Here is everything you need to know about the benefits of investing in digital and physical gold.

What is Digital Gold Investment?

Digital gold is an alternative to physical gold that you can buy from various websites and mobile applications. An investor can know the gold selling price today on various websites and can invest in 24K gold that offers 99.9% purity.

Pros and Cons of Investing in Digital Gold

  • Investing in digital gold is a small investment. The purchase and sale of digital gold online ensure 100% transparency in transactions.
  • Investing in digital gold is not accompanied by additional expenses of storing gold. When an investor buys digital gold online, the company places the gold of an equivalent amount in a safe vault in the investor’s name. Anytime the investor wants to sell the gold, the trading company removes the gold from the vault.The investor can physically redeem the gold whenever he wants, in the form of cash or physical gold.

What is Physical Gold Investment?

Physical gold investment is how you usually buy gold as an investor for consumption or trading. It can be in the form of coins, biscuits, ornaments, or gift items. Investors can buy physical gold directly from a jeweller to eliminate the counterparty risk.

Pros and Cons of Investing in Physical Gold

  • Physical gold is the first choice of investors who like to keep their investments private. However, investors should keep the purchase receipts safe for income tax purposes.
  • Earlier, jewellers offered gold in larger denominations, like a 10-gram coin, with increasing gold prices. Now, they have started offering physical gold in the form of gold coins in as little as 0.5 gram weight. It has made physical gold accessible for even small investors.
  • It is extremely easy to sell physical gold as people accept it as a replacement for cash. An investor can easily carry gold to any part of the world and trade it. During times of financial crisis, you can go to the nearest jeweller, pawn shop, or gold dealer and sell your gold for instant cash.
  • Physical gold is a tangible asset that provides investors with a sense of security. This sense of security is mostly missing from digital gold, and the investor can only see or hold his gold purchase once they redeem it in physical form.
  • Physical gold never loses its intrinsic value; investors can pledge their gold against a gold loan.
  • Gold is an inflation-proof investment, and a gold investor can pass on the physical gold to future generations.
  • There are a few drawbacks of physical gold too. Physical gold comes with its carrying and storage costs. Investors who want to purchase gold ornaments have to pay making charges for the ornaments as well.

Digital Gold and Physical Gold Comparison

Parameters Physical Gold Digital Gold
Meaning Physical gold’s purity may or may not be 99.5%. Purity is guaranteed.
Price Physical gold prices are not uniform. Digital gold prices are uniform across the country.
Investment Gold biscuits or coins are available in the standard denominations of 10 grams. Hence, it requires a huge investment One can buy and sell gold by weight or by fixed worth.
Storage One has to safely store the gold in a locker or at their home.  The seller stores the digital gold in the investor’s name in a secure locker
Taxation Gains from a gold investment held for less than three years are taxable as per the investor’s income tax slab rates. For an investment withholding period of more than three years, the gains are taxable at 20% with indexation benefit. Gains from gold investments held for less than three years are taxable as per the investor’s income tax slab rates. For an investment withholding period of more than three years, the gains are taxable at 20% with indexation benefit.
Liquidity One can easily buy physical gold from any bank or jeweller. However, they can be exchanged through a jeweller. One can redeem digital gold as coins and bullion or cash out the investment.

The Final Word

Both digital and physical gold have their advantages and disadvantages. An investor can decide between the two based on their investment needs

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