Digital gold adds an additional layer of security. Physical gold is traditionally considered a “store of value”, providing security and protection. However, there is always fear and risk of physical loss or theft. When comparing physical and digital gold, it's important to consider what's most important to you as an investor.
Digital gold offers superior liquidity, value and security, but some investors will always prefer to have their gold within reach. That said, it's important to note that investors can receive the underlying ingots of their digital gold. However, this form has its own drawbacks. Trading platforms charge between 2 and 3% in terms of management fees, storage costs and insurance.
In addition, there is no regulatory authority for digital gold platforms to guarantee the interests of consumers. In addition, investing in digital gold does not offer passive income to its investors. However, digital gold is more practical and cost-effective than physical gold. The other form of digital investment is mutual funds (ETFs) and gold sovereign bonds.
Gold bonds are issued by the government. Although E-Gold and some of the first companies faced legislative problems, the arrival of blockchain technology has led to the proliferation of multiple options of this type today. Therefore, it is important for investors to consider their needs and objectives before choosing a form of gold as an investment. There has been a 150% increase in the amount of gold stored in vaults over the past year, indicating the growing popularity of the product.
If gold is sold after 36 months, the long-term capital gains tax of 20% applies with indexation benefit. Gold has often acted as an insurance policy in times of economic crisis, proving time and time again that it is a safe haven for investors. Gold must be mined (there are numerous reality shows that follow adventures in gold mining, if you're curious to know how it's done). Digital gold, or digital gold currency (DGC), offers investors the possibility of owning physical gold, with the added benefit of lower costs and greater accessibility for the common investor.
This means that the investor needs a demo account, which is not necessary to buy or sell digital gold. A gold ETF works as a passive investment tool based on the exchange rates of gold, which is traded on stock exchanges. With the entire world moving towards digitalization, gold in digital form has been gaining popularity. With all the reputable suppliers, the gold bars that support digital gold can be easily and quickly redeemed and delivered to the holder.
While Bitcoin has sometimes been described as “digital gold”, there is a category of cryptocurrency that is actually digital gold. After financial technology companies, jewelers such as Tanishq and Kalyan Jewellers are also queuing up to attract younger customers who are buying yellow metal for the first time comfortably through the digital gold route. This means that digital gold seems like a safer investment or a useful divestment from a traditional cryptocurrency portfolio.