Gold since ancient times has become a precious precious metal, a symbol of prosperity, as technology advances, we know Physical Gold vs. Digital Gold.
Although both are investment assets, there is a main difference between the two. Physical gold is real gold, we can touch and see for real. As for digital gold, we only can see the value of holding gold, but cannot touch it.
In this article, we will try to write a lot about physical gold vs digital gold. Which is better of the two? The advantages and disadvantages of both, risk, price, and so on.
Work from home CFD, forex trading online with TenkoFX
TenkoFX broker regulated by IFSC Belize
- 1 Physical Gold vs Digital Gold difference
- 2 Storing Physical Gold vs Digital Gold
- 3 Risk Physical Gold vs Digital Gold
- 4 Price Physical Gold vs Digital Gold
- 5 How to convert Digital Gold to Physical gold?
- 6 Buying Digital Gold vs Physical Gold
- 7 Which app is best to buy digital gold?
- 8 Gold as an investment vs Trading Gold
- 9 Which better option Physical Gold vs Digital Gold?
- 10 Physical Gold Malaysia
- 11 Final thought
Physical Gold vs Digital Gold difference
Both physical gold and digital gold are of equal value, a physical gold holder can resell his gold by following the market price. Likewise, with digital gold, its value will follow the price in the market.
When the physical gold holder resells the gold, the difference between the selling price and the purchase price will be charged which becomes a profit for the gold shop owner. Even selling digital gold, is the same. There difference between the buying price and the selling price which is the profit of the digital gold provider company.
Physical gold has various variations, for those who like jewelry made of physical gold. There are various choices with various models. There are in the form of rings, necklaces, earrings, and so on.
But usually, gold for investment is made in the form of bars, which is pure 24 carat gold, which is available in various sizes in the smallest units of 0.5 grams, 1 gram, 2 grams, 3 grams, 10 grams, up to 25 grams. So if you want to buy let say 0.5 gram, you need to know the price, so you can buy based amount your money.
Physical Gold Pros
- Showing luxury, holding physical gold, feeling like you really own the gold, gold can be a luxury label that gives satisfaction.
- Physical gold has a timeless Intrinsic value, history has proven that this precious metal is always in demand. Even during a crisis, one could easily sell the gold.
- Can be used as collateral for loans, gold is accepted anywhere, many pawnshops accept gold as collateral.
- You can make physical gold as an inheritance to your next generation.
- Physical and digital gold is generally anti-inflationary, they can be hedged assets over the long term.
Physical Gold Cons
- Can’t buy in small denominations so at least buying it takes bigger money.
- Have to go to the jeweler if want to sell and buy whenever needed.
- The risk of losing either due to theft, or falling unnoticed.
Digital gold, some called Gold ETFs (Exchange-traded funds) is actually the same value as physical gold, it also has a size, but it can be in a smaller amount than physical gold. Let say physical gold has to buy a minimum of 0.5 grams, but we can buy digital gold even for just 0.05 grams.
So for example the buyer has some money he buys digital gold, which will be converted into gold in a size that corresponds to the value of money against gold.
Usually, digital gold prices refer to international prices, while physical gold may vary by country, even different companies may also have different prices.
You cannot touch digital gold because you only see the value of gold online. However, you can also request that your digital gold converts to physical gold be sent to your address. If you already meet the requirements set by the digital gold provider company.
Digital Gold Pros
- You can buy gold for a small amount. There is no minimum buy limit so you can consider digital gold for small investments.
- Secure quality because it is guaranteed you will only have 24-carat gold.
- You can convert to physical gold easily, but there is usually a minimum size for getting physical gold.
- Better security because gold is stored and is the responsibility of the seller who is an authorized company.
- You can track the value of gold anytime and anywhere using a smartphone or supported device.
- You will see real-time prices, as they use standard international prices.
Digital Gold Cons
- The possible risk is that the account is attacked by hackers because digital gold uses online media.
- Another risk is that the gold company as a place you buy digital gold is just a scam.
Storing Physical Gold vs Digital Gold
If you buy gold in large quantities, you will of course need additional costs. For example, you will store physical gold in a vault in your home. You have to buy the vault which is expensive.
Or if you entrust storing your physical gold to a third party, a bank, for example, you also need an additional cost for security, because it is not free.
While storing digital gold, don’t worry about these additional costs, no matter how much you buy digital gold, there is no storing fee. But it also depends on the digital gold provider company, because there are providers who take a fee if you buy a certain amount.
The risk that you may face is being attacked by hackers, for that, you must save your password and use a two-layer security service on your account.
Risk Physical Gold vs Digital Gold
Some of the risks of buying physical gold vs digital gold have been briefly explained. The risk of physical gold is that it requires a greater cost if he entrusts gold to a third party.
While the risk of digital gold is vulnerable to hackers, and the risk of fraudulent companies. It is important for you to buy digital gold from a credible company.
Another risk for both digital gold and physical gold is if the price drops. Because the price of gold is floating, it is determined by demand and supply in the market.
The price of gold is not always fixed and does not always increase, if you buy gold when the price is high, then the price drops, then you will lose because the difference between the purchase price and the selling price is higher than the purchase price.
Price Physical Gold vs Digital Gold
Digital gold prices always refer to international prices, and they are real-time prices. So you can buy and sell at that real-time price.
While the price of physical gold, each gold company may be different in setting the price of their gold. Although these company also refers to international prices. But it does not use real-time prices. Firms A and B’s physical gold prices may differ even though they offer the same gold grade.
However, both of them have a difference between the selling price and the buying price which will be a profit for the gold company. If in forex it can be said as spread cost.
How to convert Digital Gold to Physical gold?
To convert digital gold into physical gold you must refer to the terms and conditions of the company where you buy digital gold. There is usually a certain minimum for converting digital gold to physical gold.
Let’s say you are an Indian citizen and buy digital gold through SafeGold. You need to pay a minting fee for you to get physical gold in front of your doorstep. Using SafeGold balance, you can also shop for jewelry at Candere.com jewelry store.
Meanwhile, if you buy digital gold on the National Spot Exchange Ltd, there is a certain process that you need to submit a delivery instruction slip (DIS) to the Depositary Payment (DP) along with the surrender request form (SRF).
If the form you submitted has been reviewed, details will be sent via email, for the required amount according to the buyer’s order, with all additional costs if any. However not all areas become physical gold delivery range, it only covers certain areas.
It is good to make sure when you buy digital gold, for the delivery location if you want to convert digital gold to physical gold.
Buying Digital Gold vs Physical Gold
Buying digital gold vs physical gold has its own pluses and minuses, you are the decision-maker yourself, here’s a comparison between the two:
- Physical gold purity may not be more than 99.5%, digital gold purity is guaranteed.
- The price of physical gold is not uniform in every country or company, the price of digital gold is uniform throughout the world.
- Buying physical gold there is a minimum size available, maybe when you want to buy a size of 3 grams but the minimum available is 5 grams, so you need more money. By buying digital gold you can adjust the weight or the amount of your money, it’s more flexible.
- Physical gold stored in the house, vulnerable to theft. Digital gold is stored in secure lockers on behalf of investors, safer.
- Physical gold and digital gold are both subject to income tax, tax policy depends on the government in a country.
- Physical gold is very liquid, you can melt it through the jeweler where it buys gold or at the bank. Digital gold is also very liquid, you can cash out or get your gold bullion.
Which app is best to buy digital gold?
Citing to Yahoo Finance, there are the seven best apps. But now only the five best applications for gold investment still exist, here’s a summary:
Paytm is the first app of the best, this platform from India. You can buy and sell digital gold through India’s largest payment platform. You can buy your minimum 0.01 gm above, or convert to physical gold after you have paid a certain amount of minting fee.
PhonePe is also a digital payment solution. You can also buy gold through this application. Even more, they offer a minimum of only 1 INR. You just need to create a PhonePe Gold account in the app to start buying your digital gold as an investment.
This is the third app where you can buy and invest gold digitally. Augmont is also an India-based app. In addition to gold, you can also buy Silver here with a number of funds that can be adjusted.
Mo Investor is another application for digital gold investment. This app is developed by Motilal Oswal Investment Services which is also based in India. You can buy gold or sell gold through this app 24/7.
It is known that Upwardly, which is a web app has joined ScripBox in one team, users can use Upwardly ID to login to ScripBox.
More than 1 million have used the ScriptBox application, which is a mutual fund and financial planning company. To be the gold investment app of choice in India.
Gold as an investment vs Trading Gold
Gold for investment is buying gold and then saving to protect assets for the long term. Both physical gold and digital gold can be long-term gold investments.
In addition, currently, forex traders can also trade gold instruments as the underlying value in the spot forex market with the ticker symbol XAUUSD. Of course, there is a difference between buying gold for investment and gold for trading.
Trading gold on the spot forex market allows traders to use leverage with several options available depending on the broker. Trading gold in the forex market does not use the gram size but uses a lot size based on the contract value.
Here traders will try to make a profit from the waves of ups and downs in prices that always fluctuate every day. The theory is simply to buy low and sell high.
It’s just that the risk of trading gold in the spot forex market is higher instead of buying physical gold for investment.
Which better option Physical Gold vs Digital Gold?
Choose which is the best between physical gold vs digital gold, this adapts to your needs as well. If you want tangible objects, physical gold is definitely better than digital gold. And also physical gold is more stable than digital gold which sometimes does not match the real price of physical gold.
Physical gold is also better for long-term investments, and you can store it in a safe in your own home. So it can be inherited by your next generation.
But if you need digital gold because you only have small funds, you can get it through a brokerage that operates in your territory. Digital gold is more liquid instead of physical gold, you can buy and sell faster using a brokerage platform.
For more suggestions answer which is better physical gold vs digital gold visit quora.
Physical Gold Malaysia
Although several banks in Malaysia such as Maybank, Public Bank, CIMB offer Gold Saving Accounts. But it is certainly different from buying physical gold. Gold Saving Account, there is no guarantee to have a physical gold backup, so investors prefer to buy physical gold in Malaysia.
Having physical gold is more protective in the event of a collapse in the USD currency although this is very unlikely because many countries have USD reserves that are backed up by gold.
Physical Gold company
Buying physical gold in Malaysia you must choose a distributor who has a good reputation. For example, UOB, because it is a bank that provides gold bullion, but the minimum purchase is 1 kg.
Here are some Malaysian physical gold companies that you might consider buying gold:
- UOB Malaysia, only 1kg gold bullion available, at Gold Department @ Jalan Raja Laut, Middle Street Branch, Bishop Branch, Butterworth Branch.
- Stop Gold, Is an authorized PAMP precious metal investment, the world’s leading gold bullion brand. founded in Ticino Switzerland in 1977.
- Nubex. Here provides physical gold with various models and forms, PAMP (Produits Artistiques Métaux Précieux) gold which is a quality gold product.
- Quantum Metal, is the largest gold distributor in Malaysia, with customers from large institutions, government agencies, merchants, and individuals.
- Buy Silver Malaysia, This is another option to buy physical gold in Malaysia, there are various models and sizes of physical gold you can get here.
Physical gold vs digital gold, both have their own advantages and disadvantages. But both are good investment assets for the long term. Some experts suggest that gold investment with a portion of 15% -20% can be a balancer for an investment portfolio.
Whatever you choose, both physical gold and digital gold, the decision is yours. Which one is considered suitable and best for investment.
Note: This article is for informational purposes only and does not constitute investment advice, each investor is responsible for their own investment.
You may interest