Digital Gold Glistens As The Festive Season Favourite In India
Festivals have always held a special place in the hearts of Indians. Traditionally, festivals have been associated with the purchase of gold jewellery as a symbol of prosperity and an investment for the future. However, the advent of digital gold has been transforming the way Indians approach festival shopping.
In recent years, digital gold has gained immense popularity as a more convenient and accessible alternative to traditional gold purchases. In terms of Compound Annual Growth Rate (CAGR), gold has delivered an annual return of 9.18 per cent since 1950. Between 1970 and 2023, gold has achieved an impressive annual return of 11.55 per cent as per CAGR. The Gems and Jewellery industry contributes around 7 per cent to the country's overall GDP and estimated at Rs 5.63 trillion in 2020, expected to reach Rs 6.64 trillion by 2023.
Businessworld spoke to a few industry insiders to know why Digital gold is gaining more shine over traditional gold during this festive season.
Convenience For Consumers
One of the primary reasons for the increasing popularity of digital gold is the unparalleled convenience it offers. Digital gold platforms like Paytm, PhonePe, and MMTC-PAMP offer a hassle-free way to buy, store, and sell gold.
Sachin Kothari, Director at Augmont Gold For All says that Digital gold is becoming a buzzword for the festival season due to its convenience and accessibility. As per Kothari, Digital gold investment is a relatively new way to buy gold online, and it provides an alternative to purchasing physical gold. “Through digital gold, people can keep investing in 24K, 999.9 purest gold for as low as Re 1/. With the rapid digital penetration in India, digital gold has become more accessible to more people. Digital gold also has high liquidity, allowing investors to easily sell their gold holdings and convert them into cash or jewellery, whenever needed. Overall, investing in digital gold provides several benefits, including secure storage, ease of exchange, affordability, and high liquidity,” says Kothari.
Suvankar Sen, MD & CEO, Senco Gold and Diamonds says, “The most striking feature of Digital Gold is that it can be bought in small quantities and that makes it lucrative & attractive to the investors. Senco’s myDigiGold platform (mydigigold.com) gives the consumers the flexibility to create value and wealth which is secure and simple. Generally, consumers with a valid PAN Card or Form 61 and a bank account in their name are eligible. The myDigiGold platform by Senco gives consumers the flexibility to convert their online gold purchase into physical gold in the form of jewellery at over 149 retail outlets of Senco Gold & Diamonds across India.”
Financial Expert Aashika Jain says, "Despite digital gold being out of the Reserve Bank of India’s purview of regulation, multiple new-age fintechs partnering with trusted gold sellers including platforms such as Augmont Gold For All and SafeGold along with jewelers such as Tanishq and Senco have portals that can enable those interested in buying bite-sized gold as a way of investing in the metal."
Alignment With Traditions And Ease Of Buying
Festive periods often coincide with increased disposable income, leading people to seek asset investment options like gold for financial security. Various digital gold investment avenues, including Gold ETFs, Gold Mutual Funds, Gold Futures Contracts, and Sovereign Gold Bonds, cater to different investor preferences.
Yashoraj Tyagi, CEO & CTO, CASHe opines that Digital gold has gained immense popularity during the festival season due to its alignment with customs and traditions, making it a preferred choice for commemorating special occasions with precious metal. “This trend is also driven by the convenience of digital gold, which simplifies the process of purchasing and exchanging gold without the complexities of physical ownership. When gifting digital gold, options range from physical gold vouchers, digital gold wallets, to direct purchases, allowing customisation based on the recipient's familiarity with digital platforms and their asset preferences. These investments offer 24K purity, minimal fees, easy digital payment accessibility, secure storage, fractional ownership, compounding benefits, and high liquidity, while eliminating making charges and annual fees, making digital gold a cost-effective choice.”
Pawan Gupta, Director at PP Jewellers by Pawan Gupta too feels that it is the convenience that makes digital gold more popular during the festival season. “In recent years, more people are turning to digital gold as it allows them to invest in this precious metal without the need for physical storage. Apps and online platforms have made it incredibly easy for individuals to buy and sell gold in small denominations, making it accessible to a wider audience. Additionally, the transparency and security of digital gold transactions have boosted consumer confidence.”
Rajiv Ranjan, Head of Business Operations, eBullion says that opting for gold in digital format wherein the fractional quantity purchased is kept securely in a third part vault not only honours tradition but also brings financial prudence. “Free from making charges, melting charges, and packaging costs, it stands as a testament to a 100 per cent return on investment. As millennials embrace online gold investments, we glimpse the future, where consumer interest not only gleams with gold but extends to other precious metals, most notably, Platinum. The company is the first to offer Digital Investments in Platinum and palladium metals. It's backed by Hindustan Platinum (HP), a distinguished manufacturer and refiner of precious metals, having a customer base in over 50 countries.”
Wiser Investments In A Fast Paced Life
Digital gold empowers individuals to invest wisely. People nowadays prefer to diversify their portfolio by investing in equity, debt & gold. Says Mehak Srivastava, Head of Marketing at SahiBandhu, a leading gold loan aggregator platform, "Digital gold makes it easier especially during festive season as it can be bought in small quantities, on EMIs and even through UPI payment platforms. Moreover, with periodic investment in digital gold one can receive a piece of sleek jewellery over time turning it into an emotional asset which can be worn for day-to-day affairs. It’s a win-win especially for GenZs & millennials as gold can be adorned as an ornament, investment and used as a financial instrument of credit during financial need by availing gold loans.”
Hardik Mangla, Founder, Demiluxe, says, “Digital gold stands out with its minimal costs, including a one-time GST levy of 3 per cent. It allows for small investments, akin to a systematic investment plan (SIP), eliminating the need for substantial upfront investments associated with physical gold. While gifting physical gold remains a cherished tradition, digital gold shines for investors seeking stable returns. Gold ETFs provide a seamless integration of gold and stock investing, while Sovereign Gold Bonds offer the added advantage of earning interest. Gold Mutual Funds cater to those with Demat accounts.”
Amit Khare, Associate Vice President at GCL Broking says that numerous benefits associated with making investment in the digital gold include twenty-four carat purity of the gold, low fees, easy payments by means of digital payment applications. “Digital gold permits fractional ownership, where you can buy a small portion of gold, earn compounding interest, have the benefit of high liquidity, as opposed to physical gold which entails the making charges or the recurring annual costs that makes ownership relatively expensive and therefore Investors can opt to invest in digital gold through various options such as Gold ETFs, Gold Mutual Funds, Gold Futures Contracts, and Sovereign Gold Bonds (SGBs). Gifting of digital gold is also subject to certain aspects that need careful attention.”
For traditional jewellers too, the shift towards DIgital Gold is a welcome change.
Vijay Soni, Director, Mahabir Danwar Jewellers, Kolkata says, “The trends have kept on changing and recently Digital Gold is creating a buzz this festival season. It is more prevalent among the people who constantly have to move between the cities. The gold sector is prodigious in India. The primary production amounted to approximately 5.48 billion rupees in FY2021.”
Dishi Somani, Founder, DishiS Designer Jewelry opines, “A recent 2023 survey claims that more than 60 per cent of the masses have chosen digital gold as their preferred choice to buy gold in this festive season. People are preferring digital gold more than the physical form is the price. As I mentioned earlier the minimum buying amount in the digital format can go as low as Rs 1. This naturally makes the digital gold option a more convenient and affordable option. In short, I believe that security, accessibility and affordability are what make digital gold a buzzword today”
