Looking for a new way to invest in gold? Here are some of the options available to you in India!
If you are one of our Indian readers, it would come as no surprise to you that most people within the Indian subcontinent are obsessed with gold. Between April and December 2021, India imported US$38 billion worth of gold. India has a very strong informal system of exchange, which can be turned into cash and used in case of emergencies.
This love for gold has transitioned onto the digital realm with the advent of “digital gold”. It is a way of investing in gold without physically stocking it up. It is just like physical gold, except it is kept in vaults by the seller on behalf of the customer. Not only is there consistent quality assurance, but it is also highly liquid. You can buy and sell digital gold anytime and anywhere in the world and can invest for as little as INR 1 (US$0.013). Wondering how you can jump in on a digital gold investment? Here are some of Indian startups trying to make digital gold popular in the country.
Indiagold is an up-and-coming startup founded by Nitin Misra and Deepak Abbot, both of whom had previously worked with the Indian e-commerce giant Paytm. The platform allows users to keep their gold holdings in lockers. Once you sign up on their platform, inspectors from the startup’s team will come and evaluate your holding and place it inside a tamper-proof bag, which is then put into a steel box that is locked with your fingerprint. The cost to keep your gold holdings inside Indiagold’s lockers is much cheaper than in banks, where people traditionally store their gold.
Customers can track the real-time value of their assets on Indiagold’s app. The company also allows you to take loans against your gold reserves and also protects your gold holdings with insurance coverage. As of 2021, the startup has raised US$12 million in Series A funding.
OroPocket is a crypto-based firm that allows investors to buy cryptocurrencies backed by gold and silver. Investors can make a purchase on the platform by using traditional digital payment methods, like the unified payment interface (UPI) and debit or credit cards. Once they make a purchase, they would receive tokens of value equivalent to the actual asset. The asset backing the token would be held in storage lockers. Users can trade these tokens or get their gold and silver equivalents delivered straight to their homes for a fee. The platform allows you to instantly redeem the asset for fiat currency for up to INR 50,000 (US$666.24).
Users can also get an asset-backed credit card with OroPocket. The money spent using the card is automatically adjusted with the asset holding that they have. As of 2021, the platform has 8,000 users and manages assets worth US$350,000.
Rupeek is another platform providing users credit against their gold holdings. It operates in 35 countries and has dispersed loans worth INR 65 billion (US$852 million). The company provides computer-aided appraisal services by sending gold loan professionals to a user’s house to assess the gold on-site. While traditional jewelers hire experts with the sole purpose of verifying the purity of gold, Rupeek’s tool automatically assesses purity by excluding the enamel, diamonds or other elements that may be present on the jewelry. Rupeek tracks the shipment of gold from the user’s house and stores their gold holdings inside packages sealed with machine-readable stickers. In January this year, the platform raised US$34 million in funding, bringing its value to US$634 million.
Points to remember when investing in digital gold
While digital gold does come with a lot of benefits like liquidity and cheaper storage solutions for gold, there are certain aspects you need to consider before making an investment. Most digital gold platforms have a limit of INR 200,000 (US$2,661.96) for investment. Also, they are not regulated by authorities, like the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI). Further, there are additional delivery and making charges that you would have to pay on top of the cost of storage. In addition, some platforms offer limited-time storage, after which you would have to sell the gold or get it delivered back to you.
Besides these startups, there are other options you have to invest in digital gold as well. For instance, one of India’s trusted jewelry retailers, Tanishq, launched its own digital gold products last year. So rest assured, you have a lot of options if you are looking to invest in digital gold. Make sure to put in some research before settling for any one of these options.
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