Digital Gold Prices in India: Uncovering the Hidden Costs
Buying gold has never been easier. A few taps on your phone, a UPI payment, and you’ve secured a sliver of 24-carat metal. But a closer look at how digital gold platforms price their product reveals a hidden cost that many investors may be unaware of.
Price Disparities Across Platforms
A recent price-tracking experiment by news platform The fynprint highlights the disparities in digital gold pricing across three popular platforms: Gullak, Jar, and Paytm. The team purchased digital gold on Oct. 10 and sold it three days later, on Oct. 13, comparing buy and sell prices.
Gullak recorded a loss of Rs 148.5 on the transaction, which amounted to a -2.2% return. Jar posted a steeper loss of Rs 267.2 (-3.6%), while Paytm showed the highest loss at Rs 450.8, also reflecting a -3.6% dip.
India Bullion and Jewellers Association Reference Prices
Interestingly, if the same transaction had followed the India Bullion and Jewellers Association reference prices, it would have delivered a profit of Rs 224, or a +1.8% return.
Same-Day Buy-and-Sell Data
More revealing were the findings from same-day buy-and-sell data on October 13. Gullak showed a loss of Rs 379.7 (-3.0%), Jar showed Rs 431.1 (-3.4%), and Paytm recorded a loss of Rs 648.8, marking a -5.1% drop. In short, you could be losing money instantly, even if gold prices haven’t moved much, simply because of the wide spreads between buy and sell rates set by platforms.
Digital Gold Platforms: Intermediaries and Markup Costs
Digital gold platforms act as intermediaries: they purchase gold from importers and store it, while users interact with a front-end app to buy tiny, fractional quantities. While this allows for flexibility and easy access, it also introduces markup costs, platform margins, and taxes, which aren’t always transparent.
SEBI Regulations and Investor Protection
Adding to investor concerns, SEBI has raised flags about the unregulated nature of digital gold. It has specifically directed all SEBI-regulated entities such as brokers and mutual funds to avoid dealing in digital gold. Moreover, digital gold doesn’t fall under RBI regulation either, unlike Sovereign Gold Bonds. As a result, investor protection, dispute resolution, and regulatory oversight are lacking.
Portability and Flexibility Concerns
SEBI also warns that you can only sell digital gold on the same platform where you purchased it, which limits portability and flexibility — especially if that platform changes terms, shuts down, or gets acquired.
Alternatives to Digital Gold: Gold ETFs and Gold Mutual Funds
While digital gold remains attractive for its micro-investing features, 24K purity, and delivery options, it’s clear that the convenience comes at a cost. In contrast, regulated instruments like gold ETFs or gold mutual funds offer lower entry barriers today, transparency, and investor protection, albeit requiring a demat account.