This company buys fully insured gold stored in Switzerland vaults for you

Gold has historically been a great long-term investment for Indians.  Since 1964, the price of gold for 1 gramme in India has increased from Rs 6 to over Rs 4,500.  That’s a return of over 12% per year over 50 years for Indians who have bought gold as an investment over the years. If you are wondering how to participate in this long term rally, then there is a new way to invest in digital gold. A company, Digital Swiss Gold (DSG), provides a modern and innovative way to buy and hold gold through its mobile app, which is stored in fully insured vaults in Switzerland.  Money9 spoke to Ashraf Rizvi, founder and CEO of Digital Swiss Gold on how you can buy Swiss gold and the intricacies involved:

What differentiates DSG from other digital gold players in the market?
Ashraf: We are the only provider to offer exclusively Swiss manufactured gold that is stored in Switzerland. Our customers get certified 100% pure Swiss gold and they don’t have to worry about insurance, storage or any of the other specifics. By cutting out the middlemen and sourcing gold directly from Swiss refineries, we typically save our clients 6%-10% when compared to local prices. These are additional savings that the customer is able to buy more gold with. All client purchases are recorded permanently on a private permissioned blockchain.

What are the various costs involved in buying and selling digital gold? Is GST levied on buying and selling?
Ashraf: All costs related to buying and selling, such as those for foreign exchange translation, debit or credit card fees, service charges, are highlighted on the Digital Swiss Gold app itself and included in the pricing. Our prices are always inclusive of all buying and selling fees so there are no add-ons or surprises when you purchase gold virtually through DSG. Even with the charges, our customers get the benefit of 6%-10% savings as compared to other local vendors.

Digital gold is treated the same as physical gold with regards to taxation. A 3% GST is levied on the purchase of digital gold. Since DSG gold is outside of India, there’s no GST or import duty levied on the final price at checkout. Just like physical gold, gold ETFs and gold mutual funds, long-term gains from digital gold are taxed at 20% on returns with a 4% cess and surcharge. Returns on digital gold held for less than 36 months are not directly taxable.

Who is the regulator for Digital Swiss Gold? Is buying backed by physical gold in vaults?
Ashraf: The company is registered in Jersey, Channel Islands, with the Jersey Financial Services Commission (JFSC), the sole regulatory in Jersey and we abide by all the rules and regulations for physical gold in Jersey and Switzerland as an international merchant. Jersey is well-known and one of the highest-rated International Financial Centres in the world for safety and regulatory compliance. We also utilize Jersey Trust Company (JTC) as an independent administrator. JTC is a public company and directly regulated by the JFSC.

All client purchases are backed by physical gold stored in fully insured non-bank Brink’s vaults in Zurich Switzerland. All gold holdings are independently audited and verified by Bureau Veritas. The purchases are recorded permanently on a private permissioned blockchain, and buyers are issued a proof of ownership in the form of a digital warehouse receipt, which contains vital information such as gold holding’s account number, bar serial number and vault location. A picture of your gold bar is also provided on the app for added trust.

What are the documents required to buy Swiss Gold? Is KYC required?
Ashraf: We require a KYC and AML checks per the requirement of Jersey, Channels Islands where we are registered and we also have regulatory obligations to meet stringent KYC/AML requirements.

Can I take physical delivery of gold in India?
Ashraf: No, currently we aren’t offering delivery of gold in India. Our primary aim is to make Swiss gold available via a digital model and enable our customers to hold gold for savings at fully insured non-bank Brinks vaults in Switzerland. The customers have the freedom to sell the gold they’ve bought on our platform whenever they want and we’ll directly transfer the funds to their bank account. One can even gift Swiss gold to their family and friends via our platform. However, what we do facilitate is the physical delivery and collection of gold in Switzerland for a fee.

In case of any complaint, who will be the regulator? How will the concern be addressed?
Ashraf: Physical gold is not a directly regulated business in India or globally. However, If any of our clients have a concern or problem we have a call centre, we provide support on the mobile app and also via email. Additionally, all our activities are independently audited, all gold we sell is fully insured, certified for authenticity and we provide the ability for all our clients to be able to sell with transparent pricing and receive their funds to their account.

How are buying and selling prices determined?
Ashraf: The platform is linked with the international market and we utilise global gold prices. Both the buying and selling prices are always available live on the DSG app in INR. The prices are all-inclusive of our fees and any FX related or other costs related to the purchase so there are no hidden charges.

Considering it is not based in India, why did the company decide to launch their App and services for Indian customers first?
Ashraf: While I grew up in the US, my parents moved here from India. So, I have an understanding of the Indian gold market. As Indians, we understand the gold market better than many other nations. We have historically had an affinity for gold and view it as an important asset from a cultural and economic perspective. We already see a lot of interest from the Indian market about digital gold.