Stay safe this Akshay Tritiya and buy digital gold that may hit fresh record high this year

This year's Akshaya Tritiya may not give the Indians the opportunity to buy gold physically because of the ongoing pandemic which has resulted in lockdowns and restrictions all over the country.

May 13, 2021 / 02:02 PM IST

As we all know, Akshaya Tritiya is considered to be a highly auspicious Hindu festival. It is believed that buying gold on Akshaya Tritiya brings prosperity. Bullion has already shown an uptrend and posted the best week-on-week gain since November a week ago after reports showed an unexpected slowdown in US jobs growth, supporting the case for continued economic stimulus and low-interest rates. And with Akshaya Tritiya approaching after two days, demand either on the physical or in terms of ETFs or other platforms is expected to increase, supporting the overall sentiment.

India's gold imports in March surged 471 percent from a year earlier to a record 160 tonnes, a government source told Reuters on Thursday, as a reduction in import taxes and a correction in prices from record highs drew retail buyers and jewellers. Although World central banks are also net buyers this year having bought almost 280 tonnes of gold so far in 2021.

It will be a good decision to buy gold now as it seems like the bullion market is going to rise in the coming future as a safe-haven investment avenue. "Even technically, gold is in a strong positive trend. With economic data, Fed and US officials' remarks, it is likewise critical to take a look at the rising cases and stricter guidelines that are being re-forced in numerous nations. In case of a slower-than-expected economic turnaround, the focus will be back on gold.

One should allocate 20-30 percent of the total portfolio to gold and silver. This will provide the hedge against inflation and uncertainty and, also provide support in terms of return as last year gold and silver gave double-digit return.

We are expecting that gold may breach lifetime high levels of Rs 56,191 per 10 grams. This year we are expecting that gold may trade positive and can test $2200 levels in the international market and Rs 58,000 to Rs 60,000 levels in the domestic market.

Close

This year's Akshaya Tritiya may not give the Indians the opportunity to buy gold physically because of the ongoing pandemic which has resulted in lockdowns and restrictions all over the country. There are two ways one can buy gold this Akshaya Tritiya without going out – one through gold exchange-traded funds (ETFs) and the other which in the investment parlance is popularly known as digital gold.

ETFs offer the option of investing in gold without holding physical bullion. It is like an open-ended mutual fund whose units represent physical gold that is 99.5 percent pure, with each unit representing 1 gram of gold. At the prevailing market rate, the investment will be around Rs 4,700 for a gram of gold.

Gold ETFs had witnessed a tremendous rush in India in the financial year ending March 31, 2021. Heightened risk and uncertainty sparked by the COVID-19 pandemic elicited investors to rush to gold as safe haven as they infused over Rs 6,918 crore in gold exchange-traded funds (ETFs) in 2020-21, more than four times from the preceding fiscal.

Like gold ETFs, digital gold is another before the Indians this Akshaya Tritiya to purchase the precious metal, which acts as a hedge during the time of inflation. Digital gold can be bought online and is stored in insured vaults by the seller on behalf of the customer. All you require is Internet/mobile banking and you can invest in gold digitally anytime, anywhere.

Currently, there are three companies that offer digital gold in India-Augmont Gold, MMTC-PAMP India and Digital Gold India with its SafeGold brand.

Once you invest in digital gold, these trading companies purchase an equivalent amount of physical gold and store it under your name in secured vaults. You can exchange digital gold for physical jewellery or gold coins and bullion. One can invest as low as Re 1 to buy digital gold. Digital gold can be used as collateral for online loans as well.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Bhardwaj is the CEO - Retail at IIFL Securities.
first published: May 13, 2021 02:02 pm

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