- The gold that you purchase will be of 24K.
- The whole transaction can be done online. You can buy and sell the gold online. There is no mandate to take physical delivery of the gold for 5 years. At the same time, you can request for physical delivery and convert the digital gold into physical gold. Making charges, delivery charges and related taxes would be applicable. Motilal Oswal has tied up with some jewellers so that you can go to these jewellers and convert your digital gold to ornamental pieces.
- The gold is insured in an 100% insured facility and the responsibility and cost burden for the same lies on MMTC-PAMP.
- The minimum amount required is Rs. 500. So you can buy gold in small quantities. This makes it affordable to all investors.
- The price is determined by live international spot price of gold. It will be uniform for all buyers. Once you select to buy at a particular price, it will be valid for 6 minutes. If you do not complete the transaction within that time, you will have to redo the transaction.
- The gold will be in the organization's custody for 5 years from the date of purchase. After that it is mandatory to take custody of the gold.
- The buyer will have to provide nominee details while opening the account. In case of buyer's death, the legal heir should inform Motilal Oswal or MMTC-PAMP.
It is a convenient way to buy and accumulate gold. It can also be easily sold. There is transparency in terms of pricing and purity. You do not have to worry about safekeeping and at the same time get the delivery of physical gold whenever needed. But there are some disadvantages. Gold price has been stagnant. So from an investment perspective, it is not a great asset class. Here are some figures -
- 1 year change in Gold price has been 4.42%
- 5 year change in Gold price has been -4.06%
There are many asset classes that give better returns and/ or more flexibility. Moreover the long term change has been negative. At the same time, the gold market can turn volatile which can make you uncomfortable
Many people who want to buy gold usually buy for festive season, weddings or to wear it. They would not want to buy gold in this form.
You need to have a demat account with Motilal Oswal to buy this product which means additional cost and effort to manage these transactions. Moreover if you do not make any transaction for a period of 18 months, your account will be considered inactive and the gold you own will be sold at the price on day of liquidation and the proceeds will be held in a separate account. This means you have to compulsorily buy/sell gold which may not be your choice.
All in all, this does not seem to be a very advantageous product from an investor's or buyer's perspective