SEBI's Alert: Why Investor Protection May Not Be Available for Your "Tap-to-Buy" Gold
Recently, SEBI cautioned investors against purchasing digital gold, which is offered for sale on websites like Paytm, Google Pay, and PhonePe.
The Securities and Exchange Board of India (Sebi) was contacted by the India Bullion & Jewellers Association (IBJA), requesting that digital gold suppliers be placed under the supervision of the markets regulator or any other appropriate body. The action is intended to ensure industry legitimacy and rebuild investor confidence.
The report states that on November 11, the IBJA wrote to Sebi, requesting regulatory oversight to ensure that consumers are not being deceived.
At the moment, this company depends on the platform's trust. The value of the digital gold market has increased to ₹13,800 crore from ₹5,000 crore in 2021.
Alternatively, you could sell it and move to a regulated product. You can keep the platform if you have faith in it, but you will bear the risk.
First. Physical gold: Steer clear of jewelry and opt for coins and biscuits.
Purchasing gold jewelry, coins, or biscuits is considered physical gold. However, there is a 10–20% manufacturing fee for jewelry. Even 24-carat pure gold is not included in jewelry. Consequently, you should purchase coins or biscuits if you wish to invest in gold.
Since these aren't regarded as commodity derivatives or securities, SEBI won't be able to offer any protection in the event that the platform fails.
What should people who have already invested in digital gold do now? What other gold investment options are available besides digital gold? In this tale, let's find out.
What should people who have already invested in digital gold do now? What other gold investment options are available besides digital gold? In this tale, let's find out.
A digital version of gold is called digital gold. The company keeps the same quantity of actual gold in a vault, and you can purchase it via apps. It can also be purchased in installments, much like a SIP.
Augmont introduced it to India in 2012. The business discovered that although people adored gold, purchasing it in small quantities was challenging. As a result, they started offering fractional purchases for as little as one rupee. Third-party vaults are used to store gold, and delivery is another option.
After Augment, the government-owned MMTC and Swiss lender MKS PAMP formed MMTC-PAMP, which grew to be India's biggest gold refiner and custodian. It has gained popularity thanks to its alliances with businesses like Paytm, PhonePe, and Motilal Oswal.
Augmont introduced it to India in 2012. The business discovered that although people adored gold, purchasing it in small quantities was challenging. As a result, they started offering fractional purchases for as little as one rupee. Third-party vaults are used to store gold, and delivery is another option.
After Augment, the government-owned MMTC and Swiss lender MKS PAMP formed MMTC-PAMP, which grew to be India's biggest gold refiner and custodian. It has gained popularity thanks to its alliances with businesses like Paytm, PhonePe, and Motilal Oswal.
RBI and SEBI are unable to control it.
It is not regarded by SEBI as a commodity derivative or security. Additionally, the RBI does not regard it as a deposit or banking product. As a result, regulation is challenging.At the moment, this company depends on the platform's trust. The value of the digital gold market has increased to ₹13,800 crore from ₹5,000 crore in 2021.
In light of SEBI's warning, what should investors do?
Don't panic if you already own digital gold. All SEBI has done is issue a warning. Your gold can still be delivered to you.Alternatively, you could sell it and move to a regulated product. You can keep the platform if you have faith in it, but you will bear the risk.
In place of digital gold, where can you invest right now?
If you want to invest in gold safely, there are several safe ways…First. Physical gold: Steer clear of jewelry and opt for coins and biscuits.
Purchasing gold jewelry, coins, or biscuits is considered physical gold. However, there is a 10–20% manufacturing fee for jewelry. Even 24-carat pure gold is not included in jewelry. Consequently, you should purchase coins or biscuits if you wish to invest in gold.
Gold ETF: As simple to trade as the stock market
You can purchase and sell gold like shares with gold ETFs. The NSE and BSE are where they trade. The current market price determines how much they charge. To buy them, you need a demat account. Theft and purity are not concerns.
You can purchase and sell gold like shares with gold ETFs. The NSE and BSE are where they trade. The current market price determines how much they charge. To buy them, you need a demat account. Theft and purity are not concerns.
Gold Mutual Funds: Lump sum or SIP Investment
Fund managers make investments in gold-related stocks and ETFs. These are not traded on the NSE or BSE, in contrast to ETFs. They don't need a demat account. Investments can be made through lump sums or SIPs, just like with other mutual funds.
Fund managers make investments in gold-related stocks and ETFs. These are not traded on the NSE or BSE, in contrast to ETFs. They don't need a demat account. Investments can be made through lump sums or SIPs, just like with other mutual funds.
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