Digital Gold in Emerging Markets: What are the opportunities and challenges for investors?

Praveen Singh – AVP, Fundamental currencies and Commodities analyst at Sharekhan by BNP Paribas

Considering the case of India as an emerging market, the country is blessed with young population of around 44 crores, most of these are technical savvy and are becoming increasingly aware of investments and savings. The process is gathering pace with rise of Crypto currencies. Small but consistent investments can go a long way in gaining financial independence and realizing dreams with passage of time. Emerging markets have mostly young population. 

Praveen Singh – AVP, Fundamental currencies and Commodities analyst at Sharekhan by BNP Paribas

Considering the case of India as an emerging market, the country is blessed with young population of around 44 crores, most of these are technical savvy and are becoming increasingly aware of investments and savings. The process is gathering pace with rise of Crypto currencies. Small but consistent investments can go a long way in gaining financial independence and realizing dreams with passage of time. Emerging markets have mostly young population. 

These young people are the primary engines of growth of digital economy. Still, some research indicates that investment awareness among youth is somewhat lacking. People are generally aware of investment avenues like Crypto currencies; however, regulatory hurdles or lack of clarity on that front discourage them. That’s where both challenges and opportunities for digital gold can be found.

These young people are the primary engines of growth of digital economy. Still, some research indicates that investment awareness among youth is somewhat lacking. People are generally aware of investment avenues like Crypto currencies; however, regulatory hurdles or lack of clarity on that front discourage them. That’s where both challenges and opportunities for digital gold can be found.

Hareesh V, Head of Commodities at Geojit Financial Services

Both physical gold and digital gold have their own merits and demerits.

Hareesh V, Head of Commodities at Geojit Financial Services

Both physical gold and digital gold have their own merits and demerits.

People can choose physical gold only if he/she needs gold in the physical form at a future date. For eg, for making jewelry for marriage or occasions etc. While buying physical gold, the initial cost would be higher as compared to digital form due to making and other handling charges.

People can choose physical gold only if he/she needs gold in the physical form at a future date. For eg, for making jewelry for marriage or occasions etc. While buying physical gold, the initial cost would be higher as compared to digital form due to making and other handling charges.

So, if the basic idea of holding gold is only for investment purposes, buying gold in digital form would be more suitable.

So, if the basic idea of holding gold is only for investment purposes, buying gold in digital form would be more suitable.

Prathamesh Mallya, AVP- Research, Non-Agri Commodities, and Currencies, Angel One

Digital gold is one of the best ways of investing in the asset class as its potential to give returns is immense when compared to physical mode of investing.

Prathamesh Mallya, AVP- Research, Non-Agri Commodities, and Currencies, Angel One

Digital gold is one of the best ways of investing in the asset class as its potential to give returns is immense when compared to physical mode of investing.

India is an emerging market and introduction of sovereign gold bonds by government of India is one of the best ways to diversify into gold rather than buying physical gold. 

India is an emerging market and introduction of sovereign gold bonds by government of India is one of the best ways to diversify into gold rather than buying physical gold. 

Opportunity

1) Helps the investors to divest into digital gold and accumulate over different phases resulting in value buying of the asset

Opportunity

1) Helps the investors to divest into digital gold and accumulate over different phases resulting in value buying of the asset

2) Investors can look digital gold as a medium to diversify into productive use rather than investing in physical mode of investment.

2) Investors can look digital gold as a medium to diversify into productive use rather than investing in physical mode of investment.

3) Gives the investors an opportunity to earn interest and also need not worry about hackles of storage if one buys physical gold.

3) Gives the investors an opportunity to earn interest and also need not worry about hackles of storage if one buys physical gold.

4) Saves lot of foreign exchange in buying physical gold as India imports all the gold from other countries

4) Saves lot of foreign exchange in buying physical gold as India imports all the gold from other countries

Challenges

1) Awareness of investing in digital avenues of investing in digital gold is a challenge

Challenges

1) Awareness of investing in digital avenues of investing in digital gold is a challenge

2) Liquidity in secondary markets is also a challenge despite SOVEREIGN GOLD BONDS being listed in India for a long time.

2) Liquidity in secondary markets is also a challenge despite SOVEREIGN GOLD BONDS being listed in India for a long time.

3) Discouraging Indian consumers to buy physical gold will be a challenge.

3) Discouraging Indian consumers to buy physical gold will be a challenge.

Ronit Harisingani, Co-Founder, Spare8

Opportunities –

Financial inclusion / Frictionless onboarding 

Ronit Harisingani, Co-Founder, Spare8

Opportunities –

Financial inclusion / Frictionless onboarding 

Digital gold has the potential to provide greater financial inclusion in emerging markets. In many countries, access to financial services is limited, making it difficult for individuals to save and invest.  Spare8, an app built to put the power of gold savings at your fingertips,  has leveraged upon the UPI (Unified Payments Interface)  stack and has been able to create one of the fastest on-boarding processes ever (< 30 secs). No KYC, no scanning of documents, no bank details required for users to start their investment journey making it seamless for anyone looking forward to kick starting their journey toward financial freedom.Since UPI has now gone global and will be accessible in countries like Singapore, Australia, Canada,Qatar, US, Saudi Arabia, United Arab Emirates and the United Kingdom the digitisation of gold in these markets is very much possible.The process is fairly simple and users will be able to invest with as little as Re. 1.

Digital gold has the potential to provide greater financial inclusion in emerging markets. In many countries, access to financial services is limited, making it difficult for individuals to save and invest.  Spare8, an app built to put the power of gold savings at your fingertips,  has leveraged upon the UPI (Unified Payments Interface)  stack and has been able to create one of the fastest on-boarding processes ever (< 30 secs). No KYC, no scanning of documents, no bank details required for users to start their investment journey making it seamless for anyone looking forward to kick starting their journey toward financial freedom.Since UPI has…