As the CEO and Founder of Gilded, formerly Digital Swiss Gold (DSG), Ashraf Rizvi is responsible for the day to day running of the firm. Ashraf sets the vision and strategy for Gilded and brings over 20 years of executive experience as Founder, Managing Partner and Global Business Head. Ashraf started DSG – now Gilded, because he wanted to provide investors freedom from the fiat based financial system. His goal is to provide investors everywhere, access to gold with the benefits of ease of use, safety, security and savings. With Gilded, gold is more than just a commodity to hold on to: it’s a symbol of economic independence.
According to World Gold Council data, India spent a record $55.7 bn on gold imports in 2021, buying more than double the previous year’s tonnage, and consumption witnessed a growth of almost fifty percent. The 2021 gold import bill surpassed the previous high of $53.9 bn in 2011. This growth suggests that there’s potential for an increase in demand for digital gold and other new-age assets on the horizon in 2022.
India is a significantly young nation due to its millennial population of around 440 million people. The average age of an Indian is now approximately 28-29 years, and a significant part of this population is working. These are the new-age investors, early-career professionals earning modest salaries entering the investing world. The amounts they start their investment journey with are likely to be smaller but consistent over a long period.
Let us take a look at and try to simplify the phenomenon of digital gold adoption.
Investments in physical gold have traditionally taken the form of bars, coins, or jewellery. Therefore, investment in gold has often been a costly affair, one to be carefully planned over time. With options of fractional investments in digital gold, investment in the yellow metal has become more accessible. One can now buy gold for a hundred rupees, which was unthinkable till some time ago. New investors who have just started earning now have an option of investing in small sums at their convenience over a more extended period.
To buy gold, one had to invariably head to a bank or a jewellery store during their respective operating hours. The problem quotient with this proposition increases as the landscape shifts from urban to rural, where people travel long distances for shops or banks. Concerns over crowds during COVID create additional challenges. With a working internet connection, investment in digital gold can be done easily, at the click of a button, right from the convenience of one’s home.
Digital gold investment has far fewer or considerably fewer hassles of storage, unlike physical gold. Digital gold can be stored for little or no fees by the seller in a secure space assigned to the investor. Earlier, one had to pay a recurring locker fee to keep physical gold stored in a bank vault or run the risk of theft or burglary.
For most of rural India, which had local jewellery stores as the sole sources for gold, quality was difficult to determine and, at times, could be gravely compromised. These problems persisted in both urban and rural centres. With digital gold, however, there’s a quality assurance of 99.99K. Selling, too, is easier, at the tap of a button, unlike the elaborate planning required for carrying physical gold and gathering prices from merchants.
Investment in digital gold is also generally considered a more convenient option than investing in jewellery. There’s a significant amount of making charges associated with jewelry and required during purchase. Making charges are a sunk cost and not recoverable if the jewelry needs to be sold or recycled. There are no making charges associated with digital gold.
With the union government taking note of digital assets during budget 2022, we’d like to expect greater momentum in conversations and action towards a progressive regulatory framework for digital gold, too, in the near future. Once we have clear policies to regulate digital gold, there will naturally be greater adoption, with likely an increasing number of Indians turning to digital gold as a long-term investment.