What Is Digital Gold Investment And Why SEBI Warns Investors Against It? Know Full Details

What is Digital Gold Investment? For Indian investors, gold has long been a symbol of security and wealth. The way people purchase gold has evolved, moving from traditional jewellery and coins to the more advanced option known as digital gold. It enables investors to purchase small amounts of gold online without having to store it personally. This type of investment gained popularity due to its affordability, ease and safety.

However, the Securities and Exchange Board of India (SEBI) recently warned investors about investing in digital gold. According to SEBI, a lot of digital gold platforms are not subject to its regulations, so your money might not be entirely secure. Like other financial assets, like shares or mutual funds, digital gold has no legal protection, despite its apparent convenience.

Before investing, it is important to understand what digital gold is, how it works and why SEBI has raised concerns. Let’s explore all the key details below.

What Is Digital Gold Investment?

What is Digital Gold Investments (Image: Canva)

Digital gold is a way to purchase and sell pure gold online without waiting for physical delivery. It is backed by actual gold held in safe vaults by affiliated businesses.

Key features include:

* You can invest with as little as ₹1.
* The gold you buy is stored safely by the seller.
* You can sell or convert it into physical gold anytime.

Digital gold is made available through partnerships with private companies such as MMTC-PAMP and SafeGold on well-known platforms like Paytm, PhonePe and Google Pay.

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Why SEBI Issued A Warning Against Digital Gold

SEBI has warned Investors that digital gold is not a regulated financial product. The explanation is simple: SEBI, the RBI, or any other licensed regulator has no authority over these online gold transactions.

Key concerns raised by SEBI:

* Investors have no legal protection in case of fraud.
* It's possible that the seller doesn't really hold equivalent gold.
* Regarding purity, storage and buyback procedures, there are no standard regulations.
* Some online platforms operate without proper licenses, making your investment risky.

In short, if something goes wrong, you may not have any legal recourse to get your money back.

Safe Alternatives To Digital Gold

If you want to invest safely in gold, SEBI suggests regulated options such as:

* Sovereign Gold Bonds (SGBs) – This is issued by the government, with fixed interest.

* Gold Exchange-Traded Funds (ETFs) – It is regulated by SEBI and backed by physical gold.

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* Physical Gold– Though traditional, still a physical and secure form of investment.

These alternatives ensure your investment is under government or SEBI supervision.

Digital gold is convenient but comes with high risk due to the absence of regulation. Before investing, always check if the platform is trusted and backed by certified entities.