Buying, selling Paytm Gold is convenient, but is it worth investing in?

While gold has been a non-performer for almost five years, it has shown some upward movement in the past three months. Gold Exchange Traded Funds (ETFs) are up around 8.3 per cent over the past three months, owing primarily to the depreciation of the rupee. With Dhanteras round the corner, demand for gold is set to shoot up. Buyers are indeed spoilt for choices when it comes to options for buying gold: Right from the neighbourhood jeweller to gold funds, gold ETFs, sovereign gold bonds, and now, digital gold offered by Paytm.

Says Celeste Young, a Mumbai-based writer: “I buy gold on the Paytm app frequently. It’s very convenient. You can buy small amounts, even worth Rs 1. In fact, every time I avoid an unnecessary expense, I immediately buy gold on the app. The other day I took an auto instead of an Uber and spent the saved amount investing in gold on Paytm instead. I plan to buy gold this Diwali too.”  If, like Young, you too plan to buy digital gold offered by Paytm, here are a few things you need to know. 

When you select the Paytm Gold icon in the app, you see the live, real-time price of gold. You can choose to buy gold in grams of your choice, and make the payment. Says Anant Ladha, a Rajasthan-based certified financial planner: “Paytm Gold makes it really convenient and easy to buy gold. It’s something retail investors are drawn towards.” Live rate of gold means the price of gold in Indian rupees per gram for 9999 fine gold, as posted from time to time, inclusive of duty, but exclusive of taxes, product manufacturing/making charges, delivery charges and the like. The live price is updated frequently. 

Paytm has partnered with gold refiner MMTC-PAMP. When you buy and sell gold via the platform, the seller here is MMTC-PAMP India Pvt Ltd. It’s a joint venture between MMTC Limited, a central government undertaking and PAMP Switzerland.

Says Pankaj Mathpal, a Mumbai-based CFP: “It’s good that there’s a government entity involved. Everyone knows what happened with NSEL e-gold,” In 2014, the NSEL scam involving Rs 56 billion was revealed when the exchange failed to pay its customers who held its commodity contracts.

You can buy and sell in fractions, for example, 0.1 gram or for Re 1 or Rs 2 and the like. If the cumulative transaction value in the account crosses Rs 50,000, you will need to be KYC compliant.  

The gold you buy is stored on your behalf in MMTC-PAMP's secure vaults at no cost.   

You can sell or withdraw your gold anytime within five years. Says Ladha: “I find the gap between the buy and sell price too high to make a decent return.” If you plan to use Paytm as a trading platform to make a quick buck, think again. You are not allowed to buy and redeem gold on the same day. You can hold gold for five years only. Once this period is over, it is mandatory to sell or take delivery of the quantity in your account. 

MMTC-PAMP will buy the gold from you in case you want to sell at the price shown on the platform. The money will be credited directly to your bank account for an applicable convenience fee.  

For those wanting to invest in gold, there are other options out there. Says Mathpal: “It is better to invest in ETF as you don’t have an obligation to pay making charges and other additional charges on maturity. Sovereign gold bond (SGB) is another good option for investing in gold as it pays an annual interest of 2.5 per cent.” Concurs Ladha: “Gold funds, gold ETFs, or in case of long-term investors, SGB, are better options. With digital gold, you don’t get any interest, as you do in the case of SGB.”

It’s easy to buy, sell and redeem Paytm Gold, but there are just too many conditions, charges and details. Says Mathpal: “Its only scoring point is transaction convenience.” 

Must-know features of Paytm's Digital Gold
  • Paytm mobile wallet users can buy 24 carat 999.9 purity gold.
  • The price at which you buy or sell the digital gold is valid for only 6 minutes.
  •  You can redeem your gold in the form of gold coins or minted products. 
  • The minimum quantity for redeeming digital gold as coin is 1 gram. 
  • If a single transaction value crosses Rs 200,000, you have to submit your PAN card details.
  • Each coin will have different making charges, based on its weight and design. You will have to pay additional making charges (Rs 295-891).
  • The product will be delivered within 14 working days.

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