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Is Gold a Good Option? Check Why Digital Gold is Hot in 2022!

April 21, 2023

Table of Contents

    Table of Contents

      Gold will never go out of style. Whatever the situation, gold-physical or digital-both saves the day! To know more, check out this article.

      Off late, we all faced unforeseen instabilities in the market.

      How no job is permanent, no investment is guaranteed to give you progressive returns, and how we all need to assign a certain portion of our investment to a safe option- we all saw evidence of at least one of these facts. 

      When we think of a stable investment option, gold definitely crosses our minds.

      Being used as a store of value and a medium of exchange, gold recently took the form of an awesome investment option. Gold ETFs, Sovereign Gold Bond Schemes, etc., are all becoming famous investment options

      India's love for gold is not unknown.

      Even across the world, especially due to the marketing by the World Gold Council about gold’s social and religious significance, demand for the yellow metal has shot up in the past years. 

      The market volatility often encourages investors to look for substitutes for equity investments. To regain the strength of their portfolio, then, investors often turn to Gold investments.

      However, it is no hidden fact that the returns on gold are generally in line with or lesser than the inflation rates. Considering the fact that gold has had good performance till now, we can rely on it on rainy days.  

      Now you know that physical gold brings stability in your portfolio. For unstable financial situations, a gold investment can prove to be fruitful since you can sell it easily and get cash in return. 

      However, there might be some demerits of buying gold in physical form.

      One of such might be the storage and security problem. Not everyone is able to keep their physical gold safe at their home. Fear of theft might remain constant. In addition, when you sell your gold jewellery, the bargaining is never easy.

      In the name of breaking costs, you often get less money than you initially bought it for. 

      This problem of low resell prices but high initial purchase prices is prominent with physical gold. Next, gold jewellery doesn’t give you a regular source of income like some dividends or rentals like in case of stocks or real estate. 

      Unless you sell your precious yellow asset, you cannot expect it to give you regular rewards.

      In short, you can buy gold jewellery, flaunt it and then sell it in times of need at an expected lower rate.

      This might make you wonder, then, is gold jewellery or coins that we all traditionally invest in, not good enough?  

      Well, that is not the case-they definitely are a good option.

      Nothing can replace the social prestige that comes along with real physical gold.

      But from an investment perspective, you might want gold to do more for you.

      And considering this fast developing technology, the upgraded version of physical gold is definitely worth an investment!

      So, what can be a potentially better alternative to physical gold? Digital gold. 

      Digital gold investment is simply the digital access to the yellow metal where  you can invest in it in small fractions-anytime, anywhere! 

      Here’s what your digital gold investment can look like: 

      1. Sovereign Gold Bonds (SGBs)

      SGBs are nothing but debt instruments.

      They are offered by the Reserve Bank of India and deal in gold quantities as low as 1 gram! This investment is carried out as per the series fixed by RBI for pre-defined periods of time. 

      This trade and investment process is similar to that of the process of an initial public offering of a company where investors are open to subscribe to the shares of the company for a predefined period of time.

      2. Gold Exchange Traded Funds (ETFs) 

      Gold ETFs are traded on the stock exchanges.

      To understand them better, you can see that they are very similar to equity mutual funds. Each unit of Gold ETF = 1 gram of gold. This gold has a purity of 99.5%! 

      Stored with depositories, this physical gold acts as an underlying store of value and determines the value of each unit of gold ETF.

      The best feature is  that the investors have plenty of fund options to select  and buy the Gold ETFs from. 

      3. MCX (Multi-Commodity Exchange) Contracts

      MCX contracts are simply the derivative futures and options contracts.

      Clearly, the returns are based on hedging, speculation, and trade in the yellow metal over a small period of time. The minimum quantity to trade here is also 1 gram

      While trading in MCX Contracts, you will often come across quantity-specific terms such as: “Gold”, “Mini-Gold”, “Gold Guinea”, “Gold Petal”, etc.. investors are free to choose from these gold products at MCX. 

      One thing about MCX contracts is that they are ideally suitable for experienced investors. Even then, it is usually suggested to carry out this investment under some expert supervision. 

      4. Online Digital Gold Organisations 

      Now, the most common way to invest in digital gold is through online platforms such as the Jar app. For an amount as low as Rs. 1 with an upper limit of investment at around 2 lakhs, these apps and websites help you invest in the yellow metal with utter ease. 

      Here too, the underlying pure 24k physical gold is stored with depositories in insured vaults.

      You can even automate your digital gold investment through these platforms! 

      Some prominent benefits of investing in gold digitally are: easy storage and maintenance facility, excellent quality (pure 24 carat physical gold), quite low starting amount, widely available, easy liquidity, excellent collateral option and, generally, free home delivery! 

      Digital gold is the upgraded and definitely better version of physical gold.

      The problems associated with the low wrestling prices, quality, storage and security problems, etc. all are taken care of by digital gold investments.

      Not only does it provide stability and diversification to your portfolio, but it also serves as a reliable source during emergencies. 

      Whether you are looking for stability during market ups and downs or maintaining an emergency fund or just casually planning a wedding, gold is the first to cross your mind.  

      Download the Jar app and start saving and investing today. With your spare change of Rs.10, you can diversify your portfolio and get pure 24k gold home-delivered. Double your investment with daily spins and round-off your spare change. With Jar, you can easily kick start your savings journey. Join the Jar community today!