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Digital Gold Vs Physical Gold: How To Choose?

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Created on
April 28, 2023


What’s Inside

Gold has always been considered a safe investment due to its lower volatility and inflation-beating returns. Often, investors use gold as a way to hedge, especially during uncertain market conditions. Gold is also an excellent way to diversify your portfolio if you already have divided your asset between equity and debt.

Precious metal is also purchased as jewellery, bullion, and coins. In India, buying gold is also considered good luck.

The best part is that today a person is not limited to just buying physical gold, but digital gold also. This makes parking some of your money into gold in a digital form much more convenient.

 So, if you are confused between the two, this post will help settle the debate about digital gold vs physical gold.

Digital Gold Vs Physical Gold

Digital gold, or e-gold, is the virtual process of investing and owning precious metals. But it doesn't come with the hassle of physical gold, such as theft. The investment doesn't lose its value due to making charges, as is common in the case of physical gold jewellery. Moreover, there is no risk or hassle of storing digital gold as the ownership is virtual.

Below is a comparative study of the two types of gold investment to provide a much clearer idea.


Digital Gold

Physical Gold


Electronic representation of gold ownership (e.g., ETFs, tokens, digital certificates)

Physical bars, coins, jewellery, or bullion


Easily accessible through online platforms and apps

Requires purchasing, storage, and safekeeping


High liquidity, can be bought and sold quickly

Lower liquidity, may require finding a buyer


No physical storage required

Secure storage required (e.g., safe or vault)

Transaction Costs

Lower transaction costs, minimal spreads

Higher transaction costs (buying/selling)

Ownership Verification

Transparent, easily verifiable through blockchain

Relies on physical inspection or certificates


Easily divisible into smaller units

Physical gold may need to be melted for division


Highly portable, can be traded 24/7

Bulkier, may be challenging for large amounts

Counterparty Risk

May involve counterparty risk (e.g., ETF issuer)

Minimal counterparty risk (direct ownership)

Price Discovery

Reflects real-time market prices

May have variations based on local markets


Transactions can be tracked on the blockchain

Offers greater privacy for ownership


Subject to price fluctuations in real-time

Less susceptible to short-term fluctuations

Investment Strategies

Suitable for trading, short-term, and long-term investments

Often used for long-term wealth preservation

Confused whether to invest in gold or silver? This can help you.

Is digital gold safe?

Although digital gold may seem like the obvious choice from the above table, it is crucial to know some of the cons of this investment type.

So, let's answer the question, 'Is digital gold safe?'

  • There is no regulatory body for digital or virtual gold. This makes it a little less trustworthy for many investors.
  • Even though there is no need for physical storage for the investors, digital golds hold physical gold of equal value somewhere. So, the storage limit does exist and has an expiry date. Beyond this time limit, investors must withdraw or sell their digital gold.
  • You can only buy up to ₹2 lakhs worth of digital gold on any platform.


There is no one-size-fits-all answer to the digital gold vs physical gold debate. Both have pros and cons; ultimately, it depends on the investor's preference.

However, you can choose Fi Money as your money management platform, regardless of your investment option. The platform's user-friendly interface makes investing convenient with a few simple swipes.

Moreover, Fi Money is a partner of LiquiLoans that provide you with Peer-to-Peer (P2P) investment that helps you get up to 9% return on your investment. So, whether you wish to invest for the short term or long term, Fi Money has the solutions.

Frequently Asked Questions

What is better physical gold or digital gold?

The choice ultimately depends on your preference and investment horizon as an investor. While digital gold allows better short-term investment and does not have the storage hassle, physical gold is better suited for the long term. Also, those preferring liquidity should go for digital gold, but risk-averse investors should choose physical gold.

Where can I buy digital gold?

There are many certified gold platforms and RBI-licensed banks where you can purchase digital gold. All you need is a valid bank account and a PAN card.

Why do people buy digital gold or physical gold?

People with short-term investment goals prefer liquidity over returns and choose digital gold over physical gold. Moreover, those trying to avoid the hassle of storing physical gold, and risks like theft, can choose digital gold.

Which is the most liquid gold investment option?

Digital gold, gold ETFs, and gold mutual funds are some of the most liquid gold investment options.


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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