India joins digital gold revolution

A DIGITAL revolution is reshaping India’s $34-billion (R404-billion) gold market, with smartphones, e-wallets and flexible investment schemes drawing new buyers into a business dominated by traditional, face-to-face transactions.

Digital payment systems have ballooned in popularity in India since the government scrapped large-value bank notes in 2016.

Among these offerings are applications that enable smartphone users to buy, sell or store gold – even in small amounts – kept in secured vaults.

Although online gold purchases have been growing globally for years, they are a relatively recent phenomenon in India, where jewellery and bars of the precious metal tend to be kept in hand and given as gifts.

“In India, the action is really starting now. The digitisation of the economy will certainly lead to digitisation of gold,” Somasundaram PR, managing director of World Gold Council’s (WGC) India operations, said.

The WGC estimated total Indian gold demand at 727 tons last year and could be up to 800 tons this year.

In China, the top consumer, demand last year was 953.3 tons.

With the vast majority of purchases made in the traditional way, demand for physical gold is not abating, especially when physical gold plays an important role at Indian weddings, Think Markets UK Ltd chief market analyst Naeem Aslam said.

Besides convenience, Indian consumers are attracted to competitive pricing and ability to make purchases in tiny increments.

Gold-based financial offerings allow users to buy and store gold in fractions as small as 0.1 grams – an amount that would be uneconomical to trade physically because of the associated handling costs.

Joe Jacob, a 29-year-old entrepreneur, recently bought 5 rupees (less than R1) worth of digital gold as a trial investment.

“Digital gold is better than storing the actual metal at home, worrying about its safety,” he said. – Reuters