22 September, 2021

Digitising the world’s second-largest gold market

Gaurav Mathur, MD & Founder, SafeGold, talks about why India’s gold market needs a technology makeover and discusses the need for a digital-first platform to transform one of the country’s oldest businesses – buying, selling and investing in gold.

It was not too long ago that we as a nation were celebrating our ‘gold win’ at the Tokyo 2020 Olympics. What is it about gold – whether an ornament, a medal, Gold ETFs or Bonds – that makes it so special? 

The value we as Indians put on gold has evolved over the centuries. There is often a sense of nostalgia, pride and, more importantly, a feeling of security when one buys/invests in gold. This stems from our long, tradition-bound cultural association with the yellow metal. It is arguably one of the oldest and most trusted means to showcase and build wealth. Therefore, even during uncertain times, gold is still seen as a safe, trusted and long-term investment.


Gold vs Gold market


Despite the soaring demand for gold year after year, the manner in which it is sourced, distributed, sold and bought has remained largely unchanged. Despite major technological advancements in supply-chain management, distribution processes and e-commerce adoption, gold as a sector is still highly fragmented and unorganised.

In its present state, the sector poses a multitude of challenges to those sourcing, selling and buying gold in the country. While price asymmetry and opacity dictate that the smaller retailers have to source the metal at higher prices than larger ones, buyers all across the country are bogged down by varied prices even in the city they live in  (one country many prices). Low penetration of technology into the sector only makes it harder for retail investors in ensuring accountability, purity and enabling customisation. A ‘one size fits all’ approach, which has given way to solutions that work for large institutional players, has been hurting the small retailers, and in turn, the average gold buyer. Government schemes like the Gold Monetisation Scheme (GMS) are welcome and should be encouraged, but processes should be made easier and more customer-friendly for actual adoption.


Gold in 2020 & 2021


In the first half of 2020, gold had a remarkable performance, significantly outperforming other major asset classes. Uncertainty surrounding the COVID-19 pandemic, market volatilities, low interest rates, rising geopolitical tensions and increased central bank activities – all led to an unprecedented demand for this much-loved yellow metal.

However, there is a desperate need to change the consumer interface in buying, selling and investing in gold. Technology today has drastically changed how we shop, invest, eat, travel and stay connected, and it is high time we add gold to this list. By providing a strong technological infrastructure it would be much easier to transact with gold, making it more functional, simple and efficient.

How will digitisation make a significant difference for the many players involved in the traditional gold ecosystem? Read on to know the benefits of structuring the disorganised ecosystem on a single platform.


India’s gold market – A digital makeover


  • Retailers embracing digital: The pandemic played a huge role in nudging most traditional businesses to go online in a bid to widen their customer reach and make themselves more accessible. Jewellery retailers were no exception to this; companies like Titan have partnered with SafeGold to offer digital gold on Tanishq’s own platform. Technology is not only enabling brick and mortar businesses to propel their sales but also in procuring raw materials more efficiently. While popular, large jewellers avail huge quantities of gold for their business, small retailers from Tier 2 & Tier 3 cities experience price asymmetry due to the many layers of middlemen they need to go through to purchase the metal. The process for procuring small quantities of gold is extremely cumbersome, opaque, and archaic, involving negotiations over phone calls with little transparency on price. Moreover, the price of gold keeps varying from state to state. A platform that enables retailers to procure and deliver gold at a convenient location, irrespective of the buying quantity, and helps them connect with a wide breadth of consumers is the need of the hour.


  • Consumers investing in Digital Gold: Digital Gold, simply put, is a method of investing in physical gold without needing to physically hold the gold oneself. It combines the convenience and speed of the internet with the safety as well as security of traditional purchases or investments. Sellers of digital gold services, such as SafeGold, allow buyers to purchase gold, in even small amounts, to incrementally build up one’s gold holdings. The customer’s gold is stored in a vault and he/she is free to sell or convert to physical gold at convenience.


  • Digital partners offering gold on their platforms: Given the increasing demand for digital gold, many payment vendors, e-commerce platforms and banks are exploring gold purchase options on their online platforms. With solutions like SafeGold, vendors can leverage the existing infrastructure, and seamlessly integrate to add gold to their digital offerings. This enables them to boost transactions on their platform, as it allows them to offer a wider variety of solutions to consumers.


SafeGold differentiation


Integrating all the stakeholders in the gold ecosystem, from consumers, retailers to vendor partners on a uniform platform, and enabling a seamless experience in procurement, delivery, purchase and investment of gold is what SafeGold is built for. With SafeGold customers can get the best of both worlds – all the benefits and features of 24K physical gold, with the convenience & transparency of digital.

SafeGold powers the widest range of platforms for digital gold. Its digital infrastructure brings consumers, institutions, & jewellers together to make gold more accessible and functional. The platform deploys technology to develop innovative products in the gold industry, and offer compelling value-added services, such as jewellery redemption, gifting, loans, discounts etc.

Today SafeGold is India’s leading digital gold platform, with 50+ partners globally and over 10 million customers. The platform has completed over 50 million transactions.


Future of India’s gold market


India’s digital gold journey is still in its early stages and has a long way to go. Digitisation of the Indian gold sector has been a long-sought goal of the industry regulators and policymakers, but only now are we starting to witness the first concrete steps towards the actual change. Acceptance for this change is visible from the tens of millions of retail consumers and hundreds of jewellers offering digital gold and using platforms such as SafeGold for transacting. 

What is imperative for the sector is not assuming a ‘one size fits all’ approach to product innovation, which has not yielded great results, but closely looking at each stakeholder’s needs, constraints and opportunities individually.