Learn with ETMarkets: Lessons on changing investment trends in gold

In a transformative shift in investment patterns, digital gold is rapidly gaining prominence in India, marking a departure from traditional approaches to gold ownership. At a nascent stage, digital gold currently constitutes 3% of the country’s total annual consumption, but its trajectory suggests a promising future. This surge is particularly pronounced among millennials who are increasingly recognizing gold as a viable and accessible investment option.

Sovereign Gold Bonds (SGBs)
One notable avenue contributing to the digital gold surge is the adoption of Sovereign Gold Bonds (SGBs). These government-backed securities enable investors to own gold in a paperless form, aligning with the broader digitalization trend in the financial landscape. SGBs provide investors with the dual benefits of gold price appreciation and a fixed interest rate of 2.5%, making them an attractive proposition for those seeking stability and growth in their portfolios.

Gold ETF
Gold Exchange-Traded Funds (ETFs) also play a pivotal role in the digital gold revolution. These funds allow investors to buy and sell shares representing ownership of physical gold without the need for physical possession. With the convenience of trading on the stock exchange, gold ETFs provide liquidity and transparency, making them a preferred choice for digitally savvy investors.

App-Based Gold Buying: Paytm Gold / PhonePe Gold / Google Pay / Banks App
The digital gold surge is perhaps most palpable in the rise of app-based gold buying platforms, with Apps like Paytm, PhonePe, GPay, and bank apps providing digital Gold standing out as prime examples. These platforms offer users the ability to buy, sell, and even accumulate gold in small denominations, providing accessibility to a wide demographic, including those in semi-urban and rural areas. The ease of use, coupled with the integration of digital payment methods, has further fueled the adoption of digital gold among the tech-savvy younger generation.

Changing demographics and investment attitude
Millennials, in particular, are reshaping the landscape of gold investments. Unlike previous generations, they view gold not just as a traditional adornment but as a dynamic and digital asset.

The convenience of digital platforms aligns with their preferences for seamless, technology-driven financial transactions.
As digitization continues to permeate various aspects of daily life, the rise of digital gold signifies a paradigm shift in how Indians perceive and invest in this precious metal. With SGBs, Gold ETFs, and app-based platforms leading the charge, the future of gold investments in India is undeniably becoming more digital, inclusive, and reflective of the evolving preferences of the tech-savvy investor demographic.(The author is Vice President Research at LKP Security)

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