Do Not Call
Explore how investors in India can use their demat accounts to invest in gold securely and digitally.
Gold has long been a trusted investment asset in India. With the evolution of digital investing, the question “Can you buy gold via your demat account?” is increasingly common. The answer is yes. Instruments such as Sovereign Gold Bonds (SGBs) and Gold ETFs allow investors to hold gold in a digital format, just like shares, offering a blend of tradition and technology.
Issued by the RBI, SGBs are denominated in grams of gold and come with a fixed annual interest (typically around 2.5%). They are held electronically in your demat account and substitute for physical gold, combining appreciation potential with regular income.
Gold ETFs are market-traded funds backed by physical gold. You can buy or sell these units on the stock exchange just like equities, and they’re stored in your demat account. They track the spot price of gold, offering real-time exposure without storage worries.
These invest in Gold ETFs or gold-related securities. While the units themselves are held outside your demat account, you can monitor and trade them through your demat-linked platform, offering a convenient entry point if you prefer fund-based investing.
Offered by fintech apps and brokers, digital gold allows you to buy small quantities stored in secure vaults. While it provides ease and flexibility, it doesn’t get reflected in your demat account and may not be regulated by SEBI. It’s important to verify storage and redemption policies before investing.
Holding gold digitally brings several benefits:
Safety and security: No risk of theft, loss, or impurity issues.
Liquidity: Easy to buy and sell anytime during market hours.
Purity assurance: Gold ETFs and SGBs are backed by 99.5–99.9% pure gold.
Tax efficiency: Capital gains from SGBs are exempt if held till maturity, and you also earn interest.
Convenience: Manage all holdings via a single demat account without physical hassles.
Before investing, consider these points:
Expense ratios: Gold ETFs and related funds carry annual fees that can slightly eat into returns.
Lock-in periods: SGBs have an eight-year tenure with an exit option from the fifth year; premature redemption isn’t allowed.
Market-linked price fluctuations: Gold prices can move sharply based on global trends, geopolitical events, and currency shifts.
Regulatory clarity: Only SEBI-regulated products—Gold ETFs, SGBs—offer full protection under Indian market laws. Avoid unregulated digital gold schemes.
Buying gold through a demat account provides a seamless, secure, and tax-efficient way to invest in this traditional asset. Whether you choose Sovereign Gold Bonds for interest income, Gold ETFs for liquidity, or mutual funds for diversification, each option comes with its own set of features. Digital gold offers convenience but comes with caveats around regulation and demat integration.
By understanding the nuances of each instrument—costs, liquidity, tenure, and regulatory framework—you can choose the right format that aligns with your investment goals and risk tolerance. Embracing demat-based gold investments blends the heritage of gold ownership with the sophistication of modern finance.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Yes, it is possible to invest in gold through a demat account by buying instruments like Sovereign Gold Bonds (SGBs) or Gold Exchange Traded Funds (ETFs). These are held in electronic form and eliminate the need for physical storage.
Not exactly. While both are digital in nature, digital gold is typically held on third-party platforms and may not be regulated by SEBI. Gold held in demat form through SGBs or ETFs is managed through formal financial systems and offers added transparency.
SGBs provide interest income along with potential appreciation in gold prices. They also remove concerns related to storage, theft, and purity, making them a more secure and efficient option for long-term investors.
Yes, gold ETFs come with expense ratios or fund management fees. Additionally, investors may incur demat account maintenance charges depending on their service provider.
Yes, taxation depends on the product. Gains from Gold ETFs are subject to capital gains tax. SGBs, on the other hand, offer tax-free redemption after maturity, though the interest earned during the holding period is taxable as per the investor’s income slab.
