A global gold frenzy is underway, fuelled by rate-cut bets, war fears, and central bank hoarding. The precious metal’s price has, accordingly, shot up in India as well, trading at record highs in the spot market.
With global headwinds leaving scope for further upside, investors in India are looking to mop up the yellow metal — whether it’s in the form of physical gold, digital gold, or gold ETFs.
For those opting for intangible gold, the question remains whether they should invest via the unregulated digital gold platforms, or subscribe to the exchange-traded funds.
Digital Gold Vs Gold ETFs
Gone are the days when gold shopping meant visiting jewellery showrooms. Digital gold has emerged as the snackable, smartphone-friendly version of India’s favourite metal.
How does digital gold work? Think of it as a digital receipt for real gold. The importer buys physical gold and stores it securely in vaults. The fintech app gives users a sleek interface to buy micro-amounts of that gold.
At the other end of the investor spectrum lies the more traditional, regulated option: Gold Exchange-Traded Funds. These are mutual fund-like instruments that track gold prices, traded on stock exchanges and governed by SEBI.
Gold ETFs don’t offer home delivery, but they do offer transparency, liquidity, and regulatory protection — something digital gold lacks.
What Gives Sharper Returns
Over the past five years, spot gold is up around 160%. Digital gold schemes like have mirrored that growth, as their price is largely linked to the rate prevailing for 24-karat gold in the spot market. In comparison, LIC MF Gold ETF, one of the notable gold ETFs, delivered about 108% over the same period.
If you had invested Rs 10,000 per month in the LIC MF Gold ETF for five years (Rs 6 lakh in total), your corpus today would stand at Rs 12,49,899.
Tanishq’s Gold Harvest Scheme offers a twist: for a Rs 10,000 per month investment over 10 months (Rs 1,00,000 total), you get Rs 1,07,500 back in the 13th month, but five-year returns remain undisclosed.
Digital gold’s appeal lies in its flexibility. You buy gold for a rupee, sell anytime, no bank or broker needed. However, unlike ETFs, digital gold is unregulated. It falls through the cracks, as it is not under SEBI (like ETFs), or under RBI (like Sovereign Gold Bonds). In disputes or fraud, your options may be limited.
Gold ETFs, on the other hand, demand a demat account and operate only during market hours, but offer safety nets that fintech platforms don’t. So, next time you plan on investing in the safe haven asset, pick your vehicle of choice with all considerations in mind.
. Read more on Markets by NDTV Profit.