Digital gold for smart investors

Gold is a precious and highly liquid instrument that has the attributes of both commodity and currency. It has been used throughout history as money and has been a most popular metal for investment purpose, storage of wealth and as a source of high-quality collateral.

Gold has social and cultural significance. For us, gold means wealth and prosperity. Celebrations like weddings, Diwali and Dhanteras are considered to be incomplete without it.

No wonder we, as Indians, account for almost one-fourth of all consumption of gold globally. Yes, really!

We love the yellow metal 🙂




The desire for gold is the most universal and deeply rooted commercial instinct of the human race.     

: Gerald M. Loeb



While gold has ornamental and cultural significance for us, its investment properties are also equally good. Gold, as some form of currency or store of value, has been in circulation for centuries. As a long term store of value, it is an effective hedge against inflation while also exhibiting strong downside protection properties one would expect from an effective portfolio hedge.



Gold and silver are money. Everything else is credit.

: J.P. Morgan



Factors that affect the gold price

The gold price is affected by market supply and demand along with speculation. Gold price also relates to the USD exchange rate, oil and other commodities prices, economic instabilities and financial crises, and other world events such as wars, natural hazards and disasters. Abken (1980) and Salant & Henderson (1978) found inflation, gold demand and supply, world events, and gold auction as the determinant of gold price. More recently Tully and Lucey (2007) found that the US dollar is the main macroeconomic variable that affects gold returns. So, for Indian investors, investing in gold along with it being a macroeconomic hedge to crash in stock prices is also a currency hedge against rupee devaluation.


Enter digital gold

Digital gold is an investment option where you can buy 24K 99.9% pure gold online in denominations as low as Rs 100.  It is a simple, straightforward and transparent way to buy and sell gold online.

Think of it as physical gold, except that you don’t have to worry about purity, making charges, safe storage or ease of selling.


How digital gold works?

The amount of digital gold you purchase online is backed by 24 K 99.9% pure gold which is placed in a secured vault. To buy, you place a buy order on Kuvera and we, with the help of our partners Augmont Gold, buy the gold at market price and keep it in a secure vault for you.  Similarly, when you sell, we sell some of your gold at the then market price and deposit the cash into your bank account. Completely digital and completely secure.


How to buy digital gold on Kuvera?

It couldn’t be easier. Enter the amount or the gms you want to buy and pay by UPI, netbanking or card. Simple as that!


Why invest in digital gold (over physical gold)?

1/ Purity Certified 24K 99.9% pure gold. As good as it gets.

2/ Security – Stored in vaults by BRINKS, the global leader in asset security.  No theft issues, no bank lockers, nada.

3/ Access – Sell it online at the prevailing gold price for immediate cash or request for home delivery. Your gold, your way.

4/ Quantity – Pay only for gold. No making charges, cuts or commissions. Get more gold.

Buy it when you want to invest in gold and sell it when you need money – all from the comfort of our app. Digital gold, thus, overcomes some of the traditional challenges of investing in gold.


Why invest in digital gold (over Gold ETF and Gold Mutual Funds)?

It is a known fact that Gold ETFs and Gold Mutual Funds do not track the price of physical gold closely. The culprit is fund expenses.

The NAV for Gold ETF or Mutual Funds is computed after deducting the fee of the asset management company plus storage and custodian charges, which can all add up. Over time this can create a significant mismatch in gold returns and that of the gold ETF or Mutual Fund.

In the chart below, we look at 5-year returns from one Gold ETF (ICICI) and one Gold MF (Reliance).

The ETF gained 34.83% while the MF gained 33.01%. Between the same time (19 Sep 2014 to 6 Sep 2019), the price of 22K gold went up by 51.3% (from Rs 2,525 / gm to Rs 3,820 / gm).

That’s a big performance drag for using ETF and MF for investing in gold.


Why invest in digital gold (along with equity MFs)?

Going back to 1990 and looking at monthly data we can see that Nifty50 returned higher on average, but with higher standard deviation or risk. Risk-adjusted returns are still marginally better for gold but not by much.

Gold also has a better max drawdown (a measure of maximum loss possible) of -25% (vs -55% for the Nifty 50). That is an investor in Nifty50 would have faced a maximum peak to trough decline in the portfolio value of -55%. In the same time, an investor in Gold would have a faced a maximum peak to trough decline of -25%.


1990 Onwards Monthly Gold Nifty50
Return 10.7% 15.6%
StdDev 15.9% 27.2%
Return / StdDev 0.67 0.57
Max DrawDown -25% -55%


What gold loses in return expectation it more than makes up for in correlation and thus diversification benefits. Gold, you see, is a team player. And at times when Nifty 50 is not performing due to crash fears, wars, natural hazards or disasters, gold does well.

It helps you tide over the bad times much better. Or you could say, when the going gets tough, gold gets going.

In the past 29 years of data, the correlation of monthly gold returns and monthly Nifty50 returns is just 0.3%! 

Of the 348 monthly returns in our sample, there are 178 instances where the returns on gold and returns on Nifty 50 have opposite signs. That is if gold posted positive returns, Nifty 50 posted negative returns and vice versa. This is exactly what diversification is about – two assets, each with positive expected returns but no correlation in returns.


So, what does that mean at a portfolio level? Well, let’s look at a portfolio that is 50% gold and 50% nifty 50 at all times


From 1990 Monthly Gold Nifty50 50% Gold – 50% Nifty 50
Return 10.7% 15.6% 13.1%
StdDev 15.9% 27.2% 15.8%
Return / StdDev 0.67 0.57 0.83
Max DrawDown -25% -55% -27%


The combined portfolio has highly superior risk-adjusted returns. And the drawdown number is as close as gold’s alone. Lawrence (2003) also concludes that the low correlation between gold and stock returns makes gold an efficient portfolio diversifier.


Let’s look at two such episodes in the past in a lot more details. The bursting of the dot com bubble of 2000 – 2002 and the great financial crisis of 2008-2009.

The dot com burst of 2000 – 2002: The dot com bubble burst in early 2000 bringing an end to excesses in dot com funding and valuations in the US. Even though the bubble was mostly localized to NASDAQ the bursting of the bubble had consequences for Indian markets too. Between 2000 to 2002 Nifty50 proceeded to fall 40%. As a flight to safety and crash hedge, Gold had outsized gains of ~30% during the same time period.


The Global Financial Crisis of 2008: As per Wikipedia, “the 2008 financial crisis, was a severe worldwide economic crisis considered by many economists to have been the most serious financial crisis since the Great Depression of the 1930s, to which it is often compared.” The crisis had a severe impact on global financial markets and Nifty50 saw a monthly drawdown of ~50% during that time. Gold again shone as the crisis hedge and rallied ~30% to protect from some of the impacts of the stock market meltdown.




Just based on the correlation data, it is clear that investors should take gold seriously and have exposure to it as a macro-economic hedge, as a currency hedge and a saviour in bad times.

That it also returned ~11% during the past 29 years is just icing on the cake. 


Key Takeaways

1/ Gold has properties of both a commodity and a currency. Gold is unique among commodities due to gold’s traditional role as a safe-haven and store of value.

2/ Gold returns have a low correlation to equity returns especially during wars, market crashes, and disasters. This makes gold an effective portfolio diversifier.

3/ Digital Gold solves the issues of owning and safekeeping digital gold.



The desire of gold is not for gold. It is for the means of freedom and benefit.

:Ralph Waldo Emerson



Start investing through a platform that brings goal planning and investing to your fingertips. Visit to discover Direct Plans and Digital Gold and start investing today.

#MutualFundSahiHai, #KuveraSabseSahiHai!

40 Responses

  • Harsh Pandey

    September 24, 2019 AT 03:31

    Nice feature, Kuvera!
    Gold should be a part of a diversified portfolio. Digital gold is nice. So is Sovereign Gold Bond scheme of RBI.

    • Gaurav Rastogi

      September 24, 2019 AT 04:25

      Thanks, Harsh much appreciated.

  • Jagdish Mali

    September 24, 2019 AT 06:52

    How different is this digital gold from mutual fund or ETF in terms of expense charges

    • Gaurav Rastogi

      September 28, 2019 AT 02:53

      There are no expense charges in digital gold unlike gold mutual fund or gold ETF.

  • Vandhiadevan Varadharajan

    September 24, 2019 AT 09:43

    What is the % of exposure to have in Gold for an Retail investor portfolio. Consider how to include gold in Kuvera recommended portfolio which has Equity +Debt already. Is it only used as diversifier. What about the overall return of Digital gold say for 5/10 years. If its less than the traditional Fixed income products(after tax), then there is no necessity to include Gold

    • Gaurav Rastogi

      September 28, 2019 AT 03:06

      Most traditional all-weather portfolios will allocate 15 – 30% of your equity allocation to Gold. Note here that Gold allocation comes out of your equity allocation and not your debt allocation. For example if you are 80:20 in equity debt, then at 25% gold as part of the equity allocation, you should move to 60% equity, 20% gold and 20% debt. As your equity portion unwinds, so does your gold allocation.

      • Vandhiadevan Varadharajan

        October 1, 2019 AT 17:13

        Currently i am holding 60:40 Equity and Debt funds in my overall portfolio, Based on your allocation recommendation, should i redeem equity portion and invest in Gold. Am i correct

  • Kalpnath Singh

    September 25, 2019 AT 02:31

    Very Nice option…..Pls add on one more feature on KUVERA with ur gold partner that he may deliver physical form or redemption on his partner showroom in the form of jewellery if someone like otherwise redemption both. Hopes KUVERA platform will rock in the form of gold investment also.

    • Gaurav Rastogi

      September 28, 2019 AT 02:51

      Yes Kalpnath, the home delivery feature will be live soon making gold gifting and succession planning even easier.

  • Equebal Ahmad

    September 26, 2019 AT 19:32

    How long I can hold the gold in my portfolio when bought at Kuvera? Other platforms mentioned that digital gold bought on their platforms can be kept for 5 years. A fee will be applicable after that it not sold our converted to physical gold. Does Kuvera partner have similar policies?

    • Gaurav Rastogi

      September 28, 2019 AT 03:51

      The current policy for Augmont is that there is no limit on how long the customer can hold the gold in their portfolio in Augmont. The customers do not have to pay for storage or insurance.

  • Animesh Dutta

    September 27, 2019 AT 00:31

    Great feature! Appreciate the efforts on this. Introduction of digital silver would also be greatly appreciated. 🙂

    • Gaurav Rastogi

      September 28, 2019 AT 02:50

      Thanks, Animesh. Could you elaborate on reasons to own digital Silver please?

  • Kamesh

    September 27, 2019 AT 09:40

    Hi Kuvera Team,
    I am a big fan of Kuvera platform, as the platform serves a comprehensive database of all my MF investments and is very intuitive. This new feature to buy GOLD is a fantastic idea. Can we expect to buy e-SILVER on Kuvera soon? Is investing (buy/sell) in e-GOLD still better than GOLD ETFs after taxation? Please do explain these concerns. Looking forward to your reply. Thank you.

    • Gaurav Rastogi

      September 28, 2019 AT 02:45

      Hello Kamesh, you hold Gold for the really long term – as we say it is a multi-generational asset. The yearly tracking error on Gold ETFs, which we write about in the note above , is so big that it trumps any tax benefits and we do not see this tracking error for gold ETFs or gold MFs coming down anytime soon.

      Between Silver and Gold, we would recommend Gold, especially if you can buy it in any denomination.

  • Giri

    September 28, 2019 AT 02:32

    Thanks for bringing this feature and investment opportunity to our notice. I would like to know what is the processing charged by kuvera including the third party tie up to buy the asset ? Thanks

    • Gaurav Rastogi

      September 28, 2019 AT 02:37

      We do not charge any processing fee. We show you the same buy and sell rate as shown on Augmont site.

  • Avishek Singh

    September 28, 2019 AT 06:00

    Hi Gaurav,
    First of all great feature added on Kuvera platform..!
    I was trying to buy some gold but whenever I select a particular payment mode and proceed, I get an error showing Payment unsuccessful.I tried this more than 5-7 times and everytime i got the same error.I even tried with different modes as well but same result every time.

    • Gaurav Rastogi

      September 28, 2019 AT 10:48

      Oh, that’s not good at all. Have shared your email and query with the team working on gold. They will reach out shortly.

      Update 1 /

      You Pincode had trailing white spaces which could have been the cause of the error. We have removed them now. Could you pls try again and update?

  • amit budhiraja

    September 29, 2019 AT 04:25

    Hello, I am an existing customer and feel comfortable on mutual fund segment, I found it interesting about buying gold on paper however i am looking to know the security related to it, If i plan to buy small sum of gold for next 20 years how do i get assurance company would exist and not run away. What is RBI and SEBI’s role in protecting investors in case of something goes wrong with Augmont.

    • Gaurav Rastogi

      September 30, 2019 AT 01:10

      Hello Amit, for sale of digital gold Augmont follows RBI regulations and works with partners such as Brink’s India, to ensure that your gold is stored securely in their world-class vaults, and SEBI registered IDBI Security Trustees, whose role is to protect customer interests at all times.

      • Sandeep

        October 1, 2019 AT 05:33

        Hi Gaurav,
        Firstly amazing new feature ..but I have same concerns as Mr. Amit B is this investment in digital gold structured in case of MFs there is regulation by AFMC and proper custodian structure. How is the investor safeguarded in case of any unforeseeable mishaps in digital gold investing. Request you to please elaborate.

        • Gaurav Rastogi

          October 4, 2019 AT 01:49

          Every milligram that a customer buys from Augmont is stored in Vaults and IDBI verifies the customer balance with the Vault balance and issues a certificate. In case of Kuvera or Augmont going bust, it’s the IDBI Trusteeship who will handle the distribution of gold among the buyers, this will be practically done by selling the Gold and passing on the money to the holders. This product is structured considering the RBI guidelines for Retail Gold Business with enough safeguards in place.

  • Lakshmanan Sekar

    October 1, 2019 AT 01:53

    Hi Mr. Gaurav,

    I am all set to invest in gold. But I want 5000 Rs gold SIP option. So I no need to manually buy every month. Please let me know if SIP is available anytime soon???

    • Gaurav Rastogi

      October 1, 2019 AT 01:58

      Hello Mr Sekar, SIP option will be available very soon.

      • Tanvi

        October 4, 2019 AT 19:38

        Looking forward to this!

  • Tanveer

    October 4, 2019 AT 07:23

    Hi Gaurav,

    This is a great feature that you have added.

    I have a question here though. Since the prices of bold have shot up by from 3217/gm in Oct’18 to 3919/gm this date. In the 2 years before that, the pricing has more of less been the same. What might be the reason for this? And also, is there something like ‘timing’ of gold purchase? Since this is Diwali season and prices are to go up since there will be more buying spree.

    However, I would like to know what is the relation in pricing changes between Gold Price vs USD vs INR.

    I did a bit of research on my own but could not find any evidence of all 3 being interlinked.

    I would really appreciate your help on this. Regards

    • Gaurav Rastogi

      October 14, 2019 AT 06:05

      Hello Tanveer, we do not believe in timing, either in MF or in gold. Periodically buying gold, just like periodically buying MF, will have the best diversification effect on your portfolio.

      Gold, like other commodities such as Oil, is priced in USD. So when USD strengthens, the price of Gold in INR goes up.

  • Nimit

    October 5, 2019 AT 06:57

    Just in case, KUVERA or AUGMONT or BRINKS fails (becomes bankrupt), what is the security of investments?

    • Gaurav Rastogi

      October 7, 2019 AT 01:30

      Every milligram that a customer buys from Augmont is stored in Vaults and IDBI verifies the customer balance with the Vault balance and issues a certificate. In case of Kuvera or Augmont going bust it’s the IDBI Trusteeship who will handle the distribution of gold among the buyers, this will be practically done by selling the Gold and passing on the money to the holders This product is structured considering the RBI guidelines for Retail Gold Business with enough safeguards in place.

  • Abhijit

    October 7, 2019 AT 04:19

    Hi Gaurav,
    Will the selling price be the same as the buying price here?
    In some digital gold buying schemes I have found that buying and selling prices are different. How bout in this case?

    • Gaurav Rastogi

      October 7, 2019 AT 04:31

      Hello Abhijit, the difference in buying and selling price is called the bid-ask spread. It is true for all assets that trade in real time – equity, ETF, commodities including gold etc.

      You can learn more here –

  • Dr pradip trivedi

    October 8, 2019 AT 11:50

    Good..but what is city of which the rate is applied. Can we start SIP

  • Ramesh Balakrishnan

    October 10, 2019 AT 05:24

    Is there any additional costs involved apart from GST?

    • Gaurav Rastogi

      October 12, 2019 AT 13:02


      • Ramesh Balakrishnan

        October 14, 2019 AT 06:47

        For the first time, i felt cheated using Kuvera. Bought gold today and clicked ‘Sell’ button just to check the selling price. There is 100Rs difference between buying and selling price, which is huge. This is not mentioned anywhere in the home page, Yes, i understand you need to generate a profit along with your partner Augmont, but full disclosure will be highly appreciated.

        • Ramesh Balakrishnan

          October 14, 2019 AT 06:47

          *100Rs per gram.

  • Pratik

    October 13, 2019 AT 17:53

    Hi, what are tax implication on capital gain in Digital gold and what is the minimum weight required for physical delivery?

    • Gaurav Rastogi

      October 14, 2019 AT 07:35

      Tax implications are same as physical gold, upto 3years it’s Short term, more than 3 years its long term CGT