Most basic investment books start by breaking down investments into Debt and Equity. Some go further by adding gold to the mix while some go even further by adding real estate.
Gold is considered a safe haven. At times (like the current pandemic), gold have proven its worth as a safe haven. Hence many alternate forms of investments have been designed for investments into gold. Most people prefer to buy physical gold in coins or jewellery form, others buy Sovereign gold bonds. yet, some others have taken the gold mf route. But, recently MMTC-PAMP collabration has started providing digital gold in India. www.mmtcpamp.com
Digital gold model has started in India with a bang. MMTC-PAMP is now partnering with
- Google pay
- Motilal Oswal
- Stockholding corporation of India
collectively these wallet/ demat providers easily cover 80-90% of the population that is using mobile payments or investment apps.
Investments in gold has been unheard of among the middle class mostly because of the high cost. Even a minimum 100g purchase would require 3-4 lacs depending on the market price. Digital gold aims to solve this by providing small investments starting with re1 on some platforms. Hence, a small time investor can also do an SIP in physical gold where the gold is stored in MMTC-Pamp.
But I have found some cons here.
- There is no clarity as to what will happen if the middlemen (the service providers like HDFC, google pay and paytm etc) shut shop?
- The prices are very high compared to buying the actual physical gold.
I tried purchasing physical gold on Paytm for sometime. I always used an available discount code which provided 2-3% extra gold. All the purchases were made when gold was in the range of 30-35K. Now with an investment of 10000, I am hardly getting a profit of 1000=1500 upon selling. So, basically Paytm not only charges a high margin on purchase, they also charge for buying back the gold. So the investor hardly makes a profit. On Akshaya Tritiya their prices for gold touched Rs 4990/gram.
Does anybody have a better experience or explanation about paytm gold? Are any other platforms a better investment option? Would you rather buy physical gold from a shop?