Is Buying Gold Through Your Demat Account Possible

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.

Investors can gain exposure to gold through various instruments linked to their demat accounts. Each option offers different benefits in terms of safety, liquidity, and returns. Here’s a breakdown of the main avenues:

Sovereign Gold Bonds (SGBs)

• Issuer: Reserve Bank of India (RBI)

• How it works: Denominated in grams of gold and held electronically in your demat account.

• Key benefits:

  • Fixed annual interest of about 2.5%

  • Government-backed safety

  • Combines price appreciation with regular income

Gold Exchange-Traded Funds (Gold ETFs)

• Issuer/platform: Mutual fund houses listed on NSE/BSE

• How it works: Units represent physical gold; buy/sell like stocks via your demat account.

• Key benefits:

  • High liquidity during market hours

  • Transparent pricing linked to market rate

  • No storage or purity concerns

Gold Mutual Funds

• Issuer/platform: Mutual fund companies investing in Gold ETFs or gold-related securities

• How it works: Indirect exposure via fund units (not directly held in your demat); track/transact through demat-linked platforms.

• Key benefits:

  • Professional management

  • Convenient for diversified exposure

Suits passive investors

Buying gold digitally offers several advantages over physical ownership, making it a convenient and secure investment option.

Advantages of Buying Gold Digitally

• Safety and security: There is no risk of theft, loss, or impurity issues since the gold is held electronically.

• Liquidity: Investors can easily buy or sell during market hours without physical transfer hassles.

• Purity assurance: Products such as Gold ETFs and SGBs are backed by 99.5–99.9% pure gold, ensuring transparency.

• Tax efficiency: Capital gains from SGBs are exempt if held until maturity, along with additional interest earnings.

• Convenience: All holdings can be managed through a single demat account, reducing the need for physical storage.

Investing in gold digitially combines safety, convenience, and efficiency, making it a practical option for investors seeking flexible and secure exposure to gold.

Before investing in gold through your demat account, it’s important to be aware of certain considerations that can affect performance and returns.

Things to Keep in Mind

• Expense ratios: Gold ETFs and related funds include annual management fees that can slightly reduce overall returns.

• Lock-in periods: SGBs have an eight-year tenure, with an exit option available after the fifth year. Premature redemption before that is not permitted.

• Market-linked price fluctuations: Gold prices can vary based on global demand, currency movements, and geopolitical factors.

• Regulatory clarity: Only SEBI-regulated instruments like Gold MF, Gold ETFs and SGBs provide investor protection under Indian laws; avoid unregulated or informal gold platforms.

Keeping these factors in mind helps ensure informed, secure, and effective gold investments through your demat account.

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.

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.