Digital gold investments jumped 83% year-on-year to reach Rs 2,590 crore in September, fueled by easy app-based access. While the convenience of micro-investing via UPI attracts many new buyers, investors should note that digital gold remains an unregulated product without direct oversight from the Securities and Exchange Board of India.
Indian investors moved Rs 2,590 crore into digital gold in September, marking a substantial 83% increase compared to the same period last year. This trend indicates a strong preference for app-based bullion purchases, which allow users to invest in small, frequent amounts, often starting at as little as Rs 10, using payment systems like UPI. Data from the World Gold Council confirms this acceleration, showing a 76% rise in overall volumes during the first nine months of the year.
The shift toward digital gold is largely driven by its ease of use. It allows retail participants to accumulate gold without the concerns of physical storage, making it attractive for first-time buyers who are entering the precious metals market. With the festive season approaching, industry participants, including MMTC-PAMP, expect further activity, forecasting a 50% year-on-year volume increase for the upcoming Dhanteras and Diwali period.
However, there is a significant distinction between digital gold and regulated investment products. Digital gold platforms currently operate outside the primary mandate of the Securities and Exchange Board of India. Unlike Gold ETFs or Sovereign Gold Bonds, which are traded on stock exchanges and fall under strict regulatory frameworks, digital gold products are essentially contracts between the buyer and the platform provider. This means these products lack the standard safety nets and protections usually afforded to formal securities.
The core risk for investors involves custodial transparency. Since the asset is held in a digital account, the value relies on the platform’s promise that the corresponding physical gold is stored in a secure vault. Because there is no central regulator overseeing these custody arrangements, investors are exposed to the operational risk of the platform itself. To address these concerns, some industry players have begun establishing self-regulatory standards, aiming to improve the frequency of audits and transparency regarding the actual physical gold held against digital holdings.
For investors, the most important monitorable is the transparency of the platform. Before participating, it is essential to check if the platform provides verifiable certificates or independent audit reports confirming the physical backup of the gold. As the market continues to expand—with some projections suggesting the sector could reach significant global valuations—investors should track whether platforms provide clear disclosures on spreads, storage costs, and redemption processes, as these factors directly affect the actual returns on investment compared to buying physical gold or regulated gold instruments.