Digital Gold vs Physical Gold: Which one to buy this Dhanteras

October 30, 2021 Trading 6 min read
Digital gold vs Physical gold


Traditionally, gold has been the only trusted investment for several Indians. Whether in the form of coins, bars, or jewelry, it’s a much-sought-after metal that takes a place of pride in India. A respected yellow metal, Indians have accumulated gold and tout its status. However, with the world heading towards digitalization, people are moving away from physical gold and trying their hand at ways to invest in digital gold

What is Digital Gold Investment?

Instead of physical gold investment, you may think of an investment in digital gold. Digital gold investments can be made via several websites and apps in India. You should know digital gold prices in order for you to make your investment wisely. 

Nonetheless, you may be able to invest in digital gold only through limited sources. While considering digital gold vs physical gold, you may discover that digital gold offers an efficient and cost-effective means to make gold investments. 

Every digital gold unit consists of 99.99% pure gold (24-carat gold). What’s more, the minimum you can invest is Rs.100 worth of gold. Moreover, total transparency is assured as the purchase sale takes place online, at existing prices of the market. 

The best way to invest in physical gold is to buy solid gold ornaments, coins, or bars. However, some individuals have concerns over storing this and of thefts. The digital gold has proved to be a safe way to hang on to your gold investment. 

While this is a significant factor that compels people to invest in this mode of gold investment, individuals may be put off as trading platforms used to make gold investments charge anywhere from 2%-3% as an operating fee. 

To invest in any form of digital gold, like Sovereign Gold Bonds or Gold ETFs, you must know digital gold prices, found easily on portals used for investment. 

The Benefits of Investing in Digital Gold

You may buy digital gold and sell digital gold just as you do physical golSomejewelrye claim that the benefits of investing in physical gold far outweigh the drawbacks. Here are the benefits: 

  • Assured Quality – Quality is not a compromise as you invest in the purest form of gold which is 24 carat or 99.99% gold. 
  • Small Investments – No limitations or restrictions exist on amounts you purchase with. Small investments are possible.
  • Redemption Option – You can redeem your digital gold investment in physical gold form, such as coins and bars. So, a digital gold investment may become a physical gold investment
  • Taking Loans – You can take loans against your digital gold investment.
  • Security – Your investment’s security and safety are assured as there’s no threat of loss, and transactions are transparent. 
  • Monitor Your Investment – Tracking your investment through online platforms is easy with digital gold investments. Furthermore, you can view your investment’s performance conveniently.
  • Rates in Real-Time – In a digital gold investment, you make purchases of gold in real-time at real-time rates. Investors can make the most of shifts in prices and buy at lucrative rates. 

What is Physical Gold Investment?

After you know what digital gold investment is, it’s time to dwell on physical gold as an investment option. The yellow metal, over the years, has witnessed a demand that has grown exponentially. Purchased primarily for ornamentation, when people buy solid gold, the majority may not think of its value as an investment in India. 

This is because, for every occasion from weddings to festival times, gold is bought for its value as an article of jewellery. That is not to say that gold in the form of bars and coins is viewed with importance. These, too, are bought with a view to gifting and investment. Jewelry and bars and coins can be bought directly from jewelers, and coins and bars can be purchased from banks as well. 

When you are thinking of digital gold vs physical gold, you may consider that minimum investments in physical gold are quite high. For instance, gold bars are only offered in a minimal weight of 10 grams worth. 

Nonetheless, the advantage of physical gold is that any buyer will accept it for sale and offer cash in exchange. As a result, this makes it hugely liquefiable. It’s important to note, however, that physical gold prices may vary between different retailers.

At certain times, the resale value may be lower than what you get with digital gold prices. Another aspect of relevance is that any physical gold you buy is taxed and comes under the ‘capital gains’ category.

The Benefits of Investing in Physical Gold

People in India see many benefits of investing in physical gold, although digital gold investment may be a safer bet. Check out the pros of physical gold investment below: 

  • Precious and Prized – For a lot of Indians, the shine of gold is eternal, and it is seen as a prized possession when in solid form.
  • Hedge against Inflation – Possessing physical gold is a hedge against inflation for several Indians. A liquefiable commodity that can be used when the prices of other commodities rise, gold enables a safety net. 
  • Easy Loans – Loans can be taken against physical gold assets with ease. 
  • A Legacy – Indians see the benefits of physical gold investment as they can pass this on from one generation to the other. 
  • Nil Depreciation – Physical gold investment doesn’t depreciate over a period. Many other assets tend to depreciate, and for this reason, some Indians only have physical gold investments. 

Digital Gold vs Physical Gold: Which is better?

Deciding to invest in physical gold viz-a-viz digital gold can be a challenge for many. However, financial experts will always tell you to diversify your assets. Hence, while digital gold is a good choice, you may want to buy some physical gold too. Moreover, in India, some assets in the physical gold form are a must as these are bought on auspicious occasions or given as gifts. Whatever investment you opt for with gold, you should know the gold rate. Digital gold prices will be on the portal that you choose to invest with. It’s also vital that you make a comparison between digital gold and physical gold. Here are some differences related to parameters to help your investment decisions:

Criteria Physical Gold Digital Gold
Purity The purity in physical gold is subjective and needs a hallmark to substantiate it. Digital gold purity is guaranteed as you buy only authorized 24-carat units. 
Cost Physical gold costs more, depending on making charges levied differently by various jewelers.  When you invest in digital gold, charges don’t come into the picture. 
Taxation Physical gold held for three years with an increase in value is taxable under Indian Tax Laws. Gains from digital gold are also taxable in the same way. 
Safety Physical gold faces the threat of theft or loss. Added to this, there are insurance costs to bear. In the case of digital gold, there is no threat of robbery or loss. 
Storage You need a safe and secure storage space to hold physical gold. With digital gold, you don’t have to worry about storage.
Liquidity Physical gold may be resold for cash anytime if needed, but you might not be able to get exactly what you paid for the jewelry.  Digital gold may be redeemed against gold bars, coins, or cash.


Digital gold vs physical gold is a tough choice to make as both have their own sets of pros and cons. Nonetheless, whatever you opt for depends on you as an investor. If the only purpose of the purchase of gold is for investment, a digital option is better as you don’t have to worry over any threats from losses. 

Storage and insurance are also eliminated as issues. Physical gold is always preferred. Furthermore, digital gold isn’t regulated and has restrictions on the number of years that it can be held. In such cases, you may select Sovereign Gold Bonds or Gold ETFs (mutual funds in gold). 

You can think of it this way – physical gold is a better bet for consumption and or investment, although you can never get charges redeemed when you sell jewelry. Ultimately, whatever you decide is best for you, some gold investment is recommended by analysts. You may want to consider a 10%-20% investment in either physical or digital gold, or both combined. 

You not only diversify your portfolio but get a hedge against currency fluctuations, market volatility, and the risk of rising prices of inflation. 


  • Which is better, physical gold or digital gold?

You may invest partly in both forms of gold. Each has its advantages and disadvantages. With physical gold, you run the risk of buying gold which may face a threat of loss and you will have to insure it. However, physical gold can be held over a long period, for life even. Digital gold is safer to buy and store, but cannot be held in digital format for a long period. 

  • Where can you purchase digital gold?

Online platforms offer you the option to purchase digital gold. Although these are limited in number, they are credible platforms letting you buy minimal gold units, and purity is assured.

  • Is it a good idea to buy physical gold?

Any kind of gold investment depends on you, the investor. Physical gold is a good bet for consumption and can be bought most commonly in jewelry form. If your purpose is only investment, then digital gold is a safer option.

  • Do you require a massive amount to invest in digital gold?

 Unlike physical gold, even a small amount can be used to invest in digital gold.

 You can start investing in digital gold from as low as Rs. 100.

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