Advantages and Disadvantages of buying Electronic or Digital Gold

 Advantages and Disadvantages of buying Electronic or Digital Gold

 The history of Gold is over a thousand years. The catch on Gold is generally slightly higher on the Asian Continent. Gold is a hedging instrument against the Inflation. It is also acts as a diversified and a tool to mitigate losses in times of bad economy.

It is an asset and having an intrinsic value. Generally, Gold has an inverse relationship with the USD. Gold is nominated as Central bank's Queen, where the Global debt is too high in the recent decades. When there is any uncertainty on economy or political, then the Central bank would buy more Gold on it's reserves.

Historically, the Gold price in INR(Indian Rupee) has given around 990 Percent absolute returns in the past 20 years. However the yield of returns with Gold on different segment may vary. Likewise, if we invested Rs.1 Lakh in Gold instruments - Gold Bonds, Gold Funds, Gold ETF, Gold Deposit and Jewelry. The yield may be different post charges and tax.

In order to avoid this, there has been a lot of interest on buying Electronic Gold in the recent times. There are few regulated Electronic Golds likely to invest - such as Sovereign Gold Bond(SGB), Gold Mutual Funds and Gold ETF. 


 There are more advantages on buying Electronic Gold,

  • It's a Digital asset to protect Safely
  • 99.5 Purity on Gold
  • Invest in a little or any amount
  • Collateral Loan Facility
  • High Safety & Liquidity
  • Real time update on Gold prices & NAV
  • Very low expenses or brokerage
  • Redeem as a physical Gold or Cash
  • Easy to manage on Investment Portfolio

There are some disadvantages on this. Let's see that too. 


  • Investment limit on certain products
  • Very Little or No Passive Income
  • Charges are little higher than equity brokerage
  • Holding or Lock-in period is high (SGB)

The Tax treatment on Gold investment is slightly different with few products. The Govt backed Sovereign Gold Bonds(SGB) have a maturity period of 8 years. If we are holding the investment till the said years, no tax on maturity amount.

We will see the Taxation rules for Gold investments in detail on some other article !

Kindly share your views / comments with a smile :)   


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