By Roshan Aslam, Co-founder & CEO of GoSats: The world is flourishing digitally and investment patterns are also shifting simultaneously. As a result, a digital divide is being highlighted across demographics, especially age groups and geography, with younger Indians from urban India offering a more preferential treatment towards digital assets.
However, historical data suggests that Indians have been more receptive to conventional assets for investments i.e. gold, land and other similar commodities.
This was one of the major reasons why when digital gold was introduced to the market, it received significant traction among young Indians, who were interested in gold but did not have the economic conditions for it.
A 2024 poll highlighted that over 75% of respondents below the age of 35 preferred digital gold. The primary reasons cited for this preference were the liquidity aspect of digital gold, along with the convenience of purchasing or selling it.
Furthermore, since digital gold does not need physical storage, the security issue is addressed simultaneously, leaving the scope of investments among young individuals open, especially in urban India.
The poll also revealed that millennials have been one of the largest constituents of digital gold, with over 65% of individuals responding in favour of it.
Considering the major part of this particular age group does not hold a parity of purchasing power with older age groups due to a number of factors, digital gold is automatically becoming the go-to option for investments among them.
Status in Urban India
The fact that gold remains the preferred mode of investment in India is because of the value it generates. For example, the consolidated return generated by different gold investment tools in India, including physical gold, SGBs, digital gold, ETFs and others, was at 25%.
The next most value-driven investment option was government bonds, at a mere 10%. However, the unprecedented hike in gold prices means that only a handful of investors can buy the yellow metal, leaving digital gold the unrestricted access to a large market where accessibility, liquidity and ease of purchase take precedence.
In urban India, this is why digital gold has become steadfast in garnering more attention. It can be purchased via authorized partners online, and the minimum capital for investment remains at a highly affordable INR 100.
Its high accessibility is further bolstered by its availability on popular E-Wallets like Paytm, Phonepe and Google Pay. By tapping the heart of how urban India spends, the popularity of digital gold has been strengthened unprecedentedly.
At present, the latest estimates reveal that at least 80 Crore Indians have invested in digital gold in some capacity, an aspect that has been driven by the rising popularity of different digital platforms, as highlighted by the Indian Institute of Management Ahmedabad (IIM-A).
Furthermore, individuals in urban India have proved to be significantly interested in investments, and digital gold offers them a unique option where they are able to diversify their portfolio.
By investing in digital gold, they are uniquely positioned to hedge inflation and instant liquidity — aspects that are helping them to drive their financial aspirations.
Favourable aspects
To understand what makes digital gold more preferred for investors living in urban areas, it is important to understand the distinguishing aspects of the commodity.
To begin with, digital gold allows fractional ownership, meaning that anyone can purchase only small amounts of it with capital requirements of as low as INR 100.
This essentially helps to extend the potential buyer’s community to much more than it is possible for physical gold. With INR 100, digital gold is a prime investment option for individuals from different socio-economic capacities, helping them with their respective financial aspirations.
Secondly, digital gold comes with assured purity and insured storage options. What this means is that with digital gold, there is no chance of fraud regarding quality, as it comes with 99.99% pure 24k gold.
Also, it does not require any physical storage for the buyers, however, its electronic/digital signature remains insured, helping to curb the impact of any malicious attempts.
Digital Gold also offers Systematic Investment Plans (SIP), a phrase that has increasingly become synonymous with individuals’ investment journeys in urban India. Furthermore, the purchase process itself remains real-time, enhancing its accessibility aspects over physical gold.
These aspects align themselves closely with what urban India is looking for, has the capacity for, and how it spends — this trifecta essentially becomes the driving principle that is making inroads for digital gold in urban India.
Looking forward
As digital infrastructure in India flourishes, the emphasis on digital gold will rise simultaneously. At present, physical gold prices have crossed INR 1 lakh, effectively rendering a large part of Indians unable to purchase it owing to low-income brackets.
At the same time, fractional ownership and ease of accessibility and liquidity aspects will drive digital gold’s market penetration in the years to come.
At the same time, urban India looks uniquely positioned to drive digital gold adoption to the rest of the country, and the possibility of absolute adoption could certainly be lingering on the horizon, transforming Indians’ investment practices and preferences.
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