Gold’s value has shot up notably over the past few years. In fact, it was the best performing asset class in FY20, generating returns to the tune of 30%. The rise of digital gold has been a significant factor in its increasing prominence as an investment option.
If investing in e-gold is at the back of your mind, as is the case with countless others, make sure to glance through its fundamentals.
Essentially, digital gold or smart gold is a virtual investment tool. In easier words, it is a virtual means of investing in gold of 99.99% purity.
When someone buys digital gold, the same is insured and stored in vaults under his/her name. The holding period differs from one company to another.
Presently, 3 companies in India offer this investment option, which are:
However, one can invest in digital gold online via KredX for a more straightforward experience. We are partnered with Augmont Gold Ltd. and act as a marketplace.
E-gold is a more convenient and flexible investment option than its physical counterpart since buying or selling it is easier. To gain a better insight, check the pointers below.
Investing in a sachet of gold digitally is less expensive compared to purchasing gold bullion or jewellery. Individuals have the leeway to buy small units, which lets them invest as per their capability. Note that there is no upper limit on how much an individual can invest in this instrument in India.
Investors have the flexibility to redeem digital gold whenever they deem fit. They can either get it converted into physical gold or liquidate the same.
When investing in digital gold, investors can be assured of obtaining high-quality gold of 24 karat. Unlike physical gold, investors do not have to worry about the safety of their investment. The responsibility of safely storing e-gold lies entirely with the seller. In most cases, the smart gold is insured and held in secret vaults, which independent trustees verify.
Investors can track their past investments in digital gold online and gain insights from the available data. Also, such gold prices are directly linked to the live market price of the precious metal. It leaves little to no room for price discrepancies and allows investors to track the same with ease.
By investing in this instrument, one can hedge or balance their portfolio successfully. Gold prices typically move in the opposite direction to share prices. It comes in handy to lower overall risk concentration. Adding e-gold to a portfolio that already comprises equity instruments allows investors to ride market highs just as easily as plateau market lows.
Most digital investment platforms monitor real-time market changes and send instant updates about gold prices. As a result, investors can take advantage of the latest prices and streamline their investment activities accordingly.
When devising an investment strategy for the long run, investors should account for inflationary risks. That’s where e-gold comes into the picture. Gold is one of the few assets to have outstripped inflation rates time and again. Since its prices are relatively stable than fluctuations in a currency’s value, investors can expect better returns in the long-term, albeit inflation.
Besides these, investors can use digital gold as collateral while applying for a secured loan online. Nevertheless, before investing in e-gold, it is always advised to time the market. Thus, individuals must focus on their long-term goals and track recent gold prices to devise a sound investment strategy.