Investment Tips: Investing in Digital Gold? How safe is your money? Know here...
In today's digital age, most people are prioritizing online investments, whether in mutual funds or gold. Digital gold, in particular, has gained immense popularity in recent years because it allows investments with even small amounts. But have you ever wondered how safe your digital gold is?
Recently, SEBI issued an alert to investors investing in digital gold. SEBI has clearly stated that digital gold is not subject to any regulations of its or the RBI. Let's understand its implications and find out how safe your money is in digital gold.
What is digital gold?
Digital gold is essentially an online way to invest in gold. You can invest from ₹10 to any amount you wish. The company holds that amount of physical gold in its wallet on your behalf. You can later sell it or take delivery of it as physical gold.
Why did SEBI issue the alert?
The problem is that there is no government authority to regulate digital gold. This is why SEBI has alerted investors. Market regulator SEBI has stated that digital gold schemes are neither securities nor commodity derivatives. They are not in the preview of either SEBI or RBI. Therefore, investing in them through an unregistered online platform or jeweler can be risky.
In simple terms, this means that if a platform selling digital gold closes, your funds could be lost, and you will not receive legal protection.
What are the benefits of digital gold?
Investment is possible even with small amounts.
No hassle of purchasing, storing, and securing physical gold.
Facility to buy and sell online at any time.
Benefits from rising gold prices can be easily reaped.
What are the disadvantages and risks?
It is not regulated by any government authority.
If the company closes, investors could suffer losses.
Physical delivery is not guaranteed.
There is no insurance or security mechanism.
SEBI's recommendation: Choose regulated gold options
SEBI has advised investors to invest only in regulated gold investment products, such as:
Gold ETFs (Exchange Traded Funds)
Sovereign Gold Bonds (SGBs) – issued by the RBI
Electronic Gold Receipts (EGRs) – which can be bought and sold on stock exchanges.
These products offer both transparency and security as they are regulated by SEBI or RBI.
What should investors do?
If you have already purchased digital gold, there is no need to panic. However, caution is necessary for future investments. Digital gold purchased from a trusted platform can be held. If purchased from an unknown platform, sell it gradually. Choose gold ETFs, SGBs, or EGRs for future investments.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
