Advantages and drawbacks of digital gold

Digital gold is gold you buy online in small amounts while a provider keeps it for you in a vault. On Koshex the providers are SafeGold and MMTC-PAMP. Our guide to digital gold explains how it works.

It lets you start with as little as ₹100 on Koshex, sell at any time and ask for the metal to be delivered. Against that, its price swings, buying and selling cost you something, and it pays no income. SEBI, the Securities and Exchange Board of India, regulates the securities market, and it does not regulate digital gold.

What are the advantages of digital gold?

Four things draw people to it: a small starting amount, selling at any time, delivery on request and storage handled by someone else.

• You can start small. The minimum on Koshex is ₹100. You do not need enough for a coin or a bar. Where to buy digital gold covers the buying side.
• You can sell at any time. The sell price is lower than the buy price, as the drawbacks below explain. Our step-by-step guide to selling digital gold walks through it.
• You can ask for the metal. Koshex offers physical delivery. Converting digital gold to physical gold covers the details.
• Someone else stores it. You do not have to find a locker. SafeGold's own FAQ says it has partnered with Brink's to store your gold and that the gold is insured in storage and in transit. It also says an independent auditor or trustee confirms the balances with the vault keeper each quarter. A trustee is an independent company appointed to act for the customers. MMTC-PAMP's own page says its gold is kept in bank-grade, fully secured and insured lockers at its own facility.

Those provider statements are the providers' own claims about their own arrangements. They are not rules that apply to every provider.

What are the drawbacks of digital gold?

The price can fall and stay down, SEBI does not regulate it, it pays no income, and buying, storing and selling cost you something.

The price can fall for years. RBI publishes a yearly average price for gold in Mumbai, per 10 grams. The average for 2015-16 was about 12% lower than for 2012-13. It was back above the 2012-13 level only in 2018-19. Gold in your portfolio goes through gold's price history in rupees.

It sits outside SEBI. Digital gold is not regulated by SEBI. In November 2025 SEBI said such products are "neither notified as securities nor regulated as commodity derivatives" and that its investor-protection mechanisms do not apply to them. Gold ETFs and gold mutual funds are SEBI-regulated. SEBI cautioned the public; it did not ban digital gold. Is digital gold safe? covers who holds your gold and what happens if a provider shuts down.

It pays no income. Gold itself pays no interest or dividend, so any gain comes only from a change in its price. Sovereign Gold Bonds (SGBs) are government bonds counted in grams of gold, and they pay interest. Those already issued pay 2.5% a year on the amount invested until they are redeemed. ₹10,000 in an SGB at issue earns ₹250 a year, paid in two halves. ₹10,000 of digital gold earns nothing while you hold it. Whatever you make comes from the price when you sell.

No SGB has been issued since February 2024. The example only shows what "no income" means. It is not a suggestion to buy SGBs.

Buying and selling cost you something. SafeGold and MMTC-PAMP both say GST is included in the price you pay to buy, and MMTC-PAMP puts it at 3%. GST is the goods and services tax. Neither charges GST when you sell back. With both providers, though, the sell price is below the buy price, so selling straight after buying returns less than you paid. Selling digital gold explains the gap.

A gain is taxed when you sell. The tax is 12.5% after more than 24 months, or your slab rate at 24 months or less. How digital gold is taxed in India has the detail.

Storage is free only for a while. Free storage lasts only for a period the provider sets. How long you can hold digital gold has the details.

Delivery adds charges. MMTC-PAMP says its live price is "exclusive of product manufacturing/making charges and delivery charges". Both providers say you must pay additional making and delivery charges to take coins. Making charges are what a jeweller adds to the price of the gold for making the piece.

It cannot back a gold loan. RBI's rules let banks and NBFCs (non-banking finance companies) lend against gold jewellery, ornaments and coins only, and bar loans against gold in any other form, including bars and assets backed by them. Can digital gold be used for loans? has the full answer.

Each advantage and what sits beside it

How is digital gold different from other ways to own gold?

Digital gold is a claim on gold a provider holds for you. Jewellery and coins are in your hands. Gold ETFs and gold funds are SEBI-regulated fund units, and Sovereign Gold Bonds pay interest but were last issued in February 2024.

Digital gold compared with physical gold covers the first pair. Digital gold against gold mutual funds covers the second, and ways to invest in gold lists them all.

Koshex is an app run by an AMFI-registered mutual fund distributor, and offers gold funds as regular plans, the version of a fund you buy through a distributor. See gold funds for the list.

Is digital gold a good investment?

It depends on what you want the gold for and when you need the money. Digital gold follows the gold price, pays nothing while you hold it and costs something to buy and sell.

The factors that decide it are these:

• How long you can leave it. A fall can last years, as the yearly averages above show. Money needed within a short time is exposed to a low price on the day you sell.
• What you expect from it. Gold pays no interest or dividend. If you want regular income from an asset, it does not give you that.
• What the round trip costs. GST sits in the buy price, and the sell price is lower. Delivery adds making and delivery charges.
• How comfortable you are outside SEBI's rules. The investor-protection mechanisms of SEBI do not apply to digital gold.
• What else you hold. How much gold fits depends on your other holdings. Gold in your portfolio goes through that.

No one can say in advance whether the price will rise.

The Koshex app runs a free risk-profile questionnaire.