How digital gold can pave the way for young investors’ portfolios as they look to hedge against uncertainty

Gaurav Mathur

“There is no risk in investing; there is risk in being out of control” ~ Robert Kiyosaki. This is the investing DNA of young millennials and Gen Z. Over the years, the perception of investing has shifted from a ‘to-do tax saving event’ to “A step toward building a secure future.” According to a survey, 84% of millennials have enhanced their wealth management strategies to prepare for future contingencies. Technology has played a major role in driving this behavior, Increasing investment in digital gold is a good case study.

While gold has long been considered one of the safest and most profitable investment vehicles in India, ease of access and small denominations have made digital gold a popular investment option. With stable long-term returns and no purchase caps, it proves to be a good diversification option. In a market like India, which consumes around 800 tonnes of gold per year (WGC 2021), digital gold presents a huge opportunity for its investors.

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That being said, digital gold remains a niche industry in the Indian market and has its own set of associated myths, including risks, taxes and how it differs from other gold investment options like ETFs and gold bonds. Gaining insight into the capabilities, accessibility and efficiency of digital gold will help you make informed decisions:

A more stable choice for investors in the new era: Recently, with the Covid-19 pandemic, global markets have seen huge volatility, and tensions between Russia and Ukraine have escalated, making investment options such as stock markets and cryptocurrencies unstable. In fact, the leading cryptocurrency has witnessed high average volatility (77.08%) over the past 5 years. However, the gold market was relatively stable over the same period, with an average volatility of 13.70%. Without a doubt, gold becomes a more stable investment option and part of your portfolio for long-term gains. Combine this with the benefits of less investment options, a 24K gold purity guarantee, and ease of selling and buying, making it a profitable option for diversification.

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Physical tangibility at will: Backed by actual physical gold, digital gold offers investors a unique opportunity to convert it into tangible form at their own ease and convenience. Physical tangibility ensures that your investment is solidly backed and can be easily carried around. It provides a convenient way to hold and anyone can have gold tamper-proof insured packages delivered to their door at any time.Investors can buy physical gold equivalent to the value of digital gold In the form of 24K gold coins, gold bars. The investment platform also has jewelry partners where you can exchange your digital gold for jewelry.

Physical Value and Digital Convenience: While gold bonds have a longer investment horizon, digital gold and ETFs are more liquid investment options. Digital gold also retains a long-term use case as collateral for loans. Gold storage is also a hassle for most people, as accumulating large amounts of the precious metal in one place increases the risk of theft. With digital gold, your investments are safely stored in a protected vault overseen by a reputable trustee.

(Gaurav Mathur is the founder and MD SafeGold. Opinions expressed are the author’s own. Please consult your financial advisor before investing.)


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