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Digital Gold: Meaning, Investment Options, Benefits & More!

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Created on
April 27, 2023


What’s Inside

Gold has always persisted as one of the most reliable investment options for several Indian households. But the number one limitation pertaining to this metal was that it was impossible to buy physical gold using smaller sums until the concept of digital gold was born. So, what is digital gold?

Think of it as gold existing in the virtual space. Digital gold is an alternative that allows you to purchase specific quantities of this precious metal online, eliminating the need to buy gold in its physical form. The gold you acquire is then stored in an insured vault maintained by the intermediary.

But is digital gold a suitable alternative to material assets like gold bars or jewellery? Stay with us to find the answer and explore the benefits of digital gold!

Exploring the Investment Options for Digital Gold

When you buy physical gold, you initiate direct contact with the seller to complete the sale. But during transactions related to digital gold, the number one requirement is a mediating party. This is usually a mutual fund house or another entity investing in gold and related instruments on your behalf.

So, how to buy digital gold? Here are a few popular options:

Gold Mutual Funds

Similar to how equity mutual funds pool their investments in shares of different companies, gold mutual funds attach themselves to paper and physical golds. Some fund houses may also pool money into companies that mine or extract gold. The only criterium is that 80% of the investments done by gold mutual funds must be in gold-focused instruments.

Sovereign Gold Bonds (SGB)

On behalf of the Government of India, RBI offers sovereign gold bonds (SGBs), where each bond represents one gram of gold. What makes SBB attractive is the additional 2.5% rate of interest accrued annually, along with the returns acquired due to the appreciation in gold’s value.

Gold Exchange-Traded Funds (ETFs)

Unlike mutual funds, Gold ETFs are passive instruments that focus on delivering value by following the prices of physical gold. These are considered commodity funds, except they trade like stocks. Many investors consider ETFs similar to mutual funds. However, the primary difference is that ETFs are more similar to stocks since you require a demat account to buy and sell them.

Is Digital Gold a Worthy Investment?

The digital gold price varies according to the underlying instrument, i.e., the precious metal. But is it worth investing in digital gold over physical assets like jewellery?

Assurance of Pure Gold

Digital gold is always of the purest form. Every virtual gold bought and sold on stock exchanges is 24 karat, or 99.9% pure.

No Minimum Investment

Physical gold assets require you to purchase a minimum quantity, compelling you to shell up a few thousand bucks to start your gold investment. However, most mutual funds, ETFs and bonds do not possess any such criterium.

No Additional Storage and Maintenance Cost

Physical gold has to be stored carefully, with a special emphasis on maintenance to preserve the lustre of the metal. Amidst these processes, you can incur a host of costs.

Take your First Steps into Digital Gold Investing with Fi!

Digital gold investments are made simpler with Fi. Employ our dedicated mutual fund investments to partake in gold mutual funds commission-free. Coupled with its intuitive user interface, Fi is perfect for novice & seasoned investors. Fi is 100% secure with robust security as it works under a SEBI-registered investment advisor, epiFi Wealth. Choose from weekly, daily or monthly SIP payments or set up automatic payments using a single tap!

Frequently Asked Questions

Q) What is digital gold?

Digital gold is a virtual form of gold, granting investors the flexibility to avoid purchasing physical gold while capitalising on the appreciation of gold’s value.

Q) How to buy digital gold?

You can purchase digital gold through one or all of the following investments:

  • Gold mutual funds
  • Gold ETFs
  • Sovereign gold bonds

Q) Where can I buy digital gold?

You can use platforms like Fi Money to invest in digital gold through gold mutual funds or directly purchase sovereign gold bonds offered by the RBI.

Q) Is digital gold safe?

Digital gold is a secure and reliable method of investing in gold without purchasing physical assets.


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
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