I want to invest in gold through my Zerodha account. I remember seeing a digital gold option on Coin, but now I only see Gold ETFs on Kite. Does Zerodha still offer digital gold, and which is the better investment?
Zerodha no longer offers digital gold on its Coin platform. The service was discontinued due to regulatory changes from SEBI. As a result, the primary way to invest in gold through Zerodha is now via Gold ETFs (and Sovereign Gold Bonds). For most investors, Gold ETFs are considered a more cost-effective and transparent investment compared to the digital gold product that was previously offered.
Why Zerodha Discontinued Its Digital Gold Offering
My friend, who has been a Zerodha user for years, was looking for the digital gold option he used to see on Coin. I explained that the market regulator, SEBI, issued a directive that prohibited stockbrokers from offering unregulated products. Since digital gold is not a regulated security like a stock or a mutual fund, Zerodha and other brokers had to stop providing it on their platforms.
Gold ETFs: The Regulated Alternative on Zerodha’s Kite
I then showed my friend that the correct way to invest in gold on Zerodha is now through Gold ETFs (Exchange Traded Funds) on the Kite trading platform. He was initially unfamiliar with them, but I explained that Gold ETFs are essentially mutual funds that track the price of gold and trade on the stock exchange just like a share. They are held securely in his Demat account along with all his other stock holdings.
Why Gold ETFs are a Better Investment Than Digital Gold
My financial advisor had previously explained the key benefits of Gold ETFs over digital gold. The most significant advantage is that there is no 3% GST applied to the purchase of a Gold ETF, which is a mandatory cost when buying digital gold. While ETFs have very small brokerage fees and a minor annual expense ratio, for any reasonably sized investment, avoiding the large, upfront 3% GST makes them a much more cost-efficient choice.
1 Like