Digital gold: The new darling of netizens

Investment in gold with as low as Rs 100 was almost unthinkable. With more and more players foraying into the digital gold segment, this segment is going to heat up. Leading jewellers are getting good feedback from customers within a short period as indicated by the experience of Tanishq, Kalyan Jewellers, P C Chandra Jewellers, Senco gold and diamonds and others. It is leading more and more players to come up with digital gold offerings that one can later exchange for gold jewellery.

Feedback is positive

“We are happy with the numbers. A couple of thousand customers, mainly youngsters, are coming to our web platform bought digital gold last month, which we launched with DigiGold,” said Ajoy Chawla, CEO, Tanishq.

“With the launch of the digital gold service, we aim at providing a safe, easy and reliable method for consumers who are planning to purchase 24-carat pure gold digitally. We have been witnessing a renewed interest among consumers, especially youngsters, who are looking to make systematic investments in the yellow metal,” said Ramesh Kalyanaraman, executive director, Kalyan Jewellers.

Sales crashed last year in the second-biggest consumer market after a nationwide lockdown in March.

At that time transaction of gold through online platforms was not so popular in India. But during the second wave the Indian jewellery players adapted to this new way.

“The response is good but it is not a good number if our total sale figures are taken into consideration. Maximum 1.5% of our total sales comes from digital segment. But the growth in the last one year is inspirational,” said Subhra Chandra from PC Chandra Jewellers.

But nobody is able to tell how much digital gold sale took place in the last couple of months.

“As we have just started a month ago, so it is impossible to tell the trend right now. But the feedback is very positive,” said Ajoy Chawla, CEO, Tanishq.

Trend will dominate

Digital gold is the latest trend and has democratised gold investment in India as there is no entry barrier when it comes to buying gold. This might be the next big thing in the consumer end, think market experts.

Besides, no making charge and no loss during exchange would make this medium a popular one. One has the flexibility to buy/sell gold or redeem it.

“We have partnered with trusted digital platforms such as Paytm, PhonePe, and GPay where retail investors can start investing in gold for as low as Rs 1. It is a convenient and secure way of accumulating gold and customers have an inherent trust in MMTC-PAMP digital gold as it is backed by 24K, 999.9 purest gold, and a trusted brand name,” said Anika Agarwal, president, consumer business, MMTC-PAMP.

“We believe the larger flexibility and liquidity associated with digital gold as a product will emerge as an attractive proposition very soon among millennials and Gen-Y and Z customers. By venturing into digital gold category, we are creating a holistic ecosystem and making the ‘phygital’ model more seamless,” said Ramesh Kalyanaraman of Kalyan Jewellers.

Future lies here

“Traditional gold buyers, who have natural affinity towards gold, continue to buy it as a convenient alternative allowing them to accumulate gold across multiple transactions. A serious investor usually invests 7-10% of their portfolio in gold and finds digital gold as a more liquid investment when compared to ETFs and SGBs,” added Agarwal.

“Covid obviously, has changed the mindset of a lot of jewellers and they have also been proactive in selling jewellery online. This is just the extension of the whole mindset. But this is the future of the industry,” said Subhra Chandra.

Online gold purchases, including ornaments, accounted for only about 2% of the overall sales value in 2019, according to a World Gold Council report last year. But this figure might go up to even 8% of the total sale by the end of fiscal year 2021-22.