Gold has always been a popular investment. In the past, people could only invest in physical gold. However, today’s technology allows for both physical and digital gold. So, what is the difference? Let us explore the key distinctions and see which is a better investment.
How Does Digital Gold Work?
Digital gold is the term for gold traded online. A digital gold investment is backed by physical gold in vaults. So, you do not need to store gold at home. You can easily buy or sell it anytime. Instead of coins or bars, you can opt for digital gold. One just needs an investment platform like the Aditya Birla Capital App to get started.
Advantages Of Digital Gold
- With a computer or phone, you can purchase and sell digital gold at any time, from any location.
- Since the corporation stores digital gold in safe vaults, you do not need to worry about storing it.
- You can start with tiny sums of money to invest in digital gold.
- Online tracking of your digital gold deposits is simple.
Physical Gold: What Is It?
Physical gold is tangible and includes jewellery, bars, and coins. You can buy it from stores or banks and keep it in a locker at home. Since its discovery, gold has been traded physically and valued. Investing in physical gold is common. People have done so for generations to protect wealth and counter economic uncertainty. A key benefit of physical gold is its tangibility. Unlike digital gold, which exists only online, physical gold offers security and peace of mind.
Advantages Of Physical Gold
Among the main advantages of physical gold are:
- Gold is a tangible asset. You can see and touch it, and this instils
- For millennia, people have utilised actual gold to preserve their wealth.
- To purchase and own actual gold, you do not require the internet or any other technology.
- Physical gold is widely acknowledged and accepted.
Physical Gold vs Digital Gold: Major Differences
| Aspect | Digital Gold | Physical Gold |
| Meaning | Gold bought and sold online, backed by physical gold in secured vaults | Gold in the form of bars, coins, and jewellery |
| Price | Usually aligns with the current market price | May include making costs, storage fees, and other charges |
| Investment Amount | Allows investments as low as ₹1 | Requires significant capital to invest |
| Taxation | Gains are taxed with GST on purchase | Gains are taxed with GST on purchase |
| Ownership | Held online | Held in physical forms such as coins, bars, and jewellery |
| Accessibility | Easily bought and sold online via digital platforms | Requires visiting banks or shops to buy or sell |
| Storage | Stored electronically, backed by physical gold in vaults | Requires physical storage for safety |
| Transaction Costs | Low transaction costs | High transaction costs due to transportation, insurance, etc. |
| Liquidity | High liquidity, can be sold anytime | Lower liquidity, as selling can take longer |
Investors face a choice: digital or physical gold? Each option has merits and drawbacks. Digital gold offers convenience and liquidity, while physical gold provides tangible security. Your goals and risk tolerance should guide this personal decision. Consider storage, insurance, and transaction costs carefully before investing in either form of the precious metal.