Gold as an asset has been extremely popular throughout the world. All thanks to its versatility that it can be used as a base asset against which currencies are pegged, its real world use in various gold items such as ornaments, gold jewelry, and for gifting and storage in the form of real gold coins and gold bars etc. and much more. Also, the fact that gold presents a perfect hedge against inflation, a counterbalance for highly volatile assets in a portfolio, and high liquidity makes it a very desirable asset. Due to this, gold has been able to produce consistently positive returns over a longer investment timeframe.
All thanks to digitization, now one can purchase gold online in the form of digital gold; shopping for gold in digital form eliminates expenses like storage costs, making charges, etc. and offers real time transaction settlement and high liquidity making these digital gold platforms like IndiaGold highly popular among modern investors making buying and selling physical gold an old practice.
The rise in digitization has increased convenience but has also increased the scope of scams and fraudulent activities. Since, there is a monetary aspect to buying and storing digital gold, there is a risk of fraudulent platforms scamming you out of your hard earned money. These platforms can not only steal your purchased assets/money but also can steal your personal information thus putting you at risk of identity theft and future frauds.
Hence, it is imperative to understand the risks associated with making online gold transactions, however knowing the red flags and how to spot a fraudulent transaction or a fake platform can save you from losing your hard earned money.
Digital gold is essentially physical gold in a digital form i.e. one of the most modern ways to buy gold. It is a financial asset with physical gold being the underlying asset of the derivative. It also offers the innate financial qualities of digital gold like gold rate movement, liquidity, low volatility, hedge against inflation and risk associated with risky assets in the portfolio.
The concept of digital gold is not new however not many people are familiar with how beneficial it can be. Digital gold is a financial derivative of physical gold, i.e. and the digital version of the asset provides all the financial qualities of physical gold like low volatility, stable gold prices growth, hedge against inflation, and counterbalance for risk associated with high risk assets in the portfolio.
On top of it, digital gold also offers convenience with respect to buying and selling the asset as the process and market is totally online making transaction settlement lightning quick, low cost of ownership as it negates the need for storage related costs, additional dealer markups, making charges, stone charges, among many others . And also provides security of assets as it is held with reliable platforms. Making digital gold investment through platforms like IndiaGold highly desirable.
With modern financial assets, the investment landscape has changed drastically. This has also introduced various high risk assets like cryptocurrency, NFTs, etc. This introduction of high risk and volatile assets has increased the need for investments in more stable assets which can provide a counterbalance to ensure that the investor does not lose their entire investment portfolio citing market volatility or frauds. This increased risk of frauds has led to a need for reliable platforms where the investors can transact their digital assets.
No clear information about the company, team, or ownership. One can also do a background check on the companies register website, if no information is present then it is a clear ref flag. Also, check for required licenses and compliance checks
No clear disclosure of fees, terms, or how the gold is stored and secured. This is one of the biggest red flags as investor transparency is a critical practice i. The industry, and a lack of important disclosure could indicate potential scam waiting to prey on investors.
Absence of necessary regulatory approvals or certifications means that the company is not compliant. This means that in case of nonrepayment, the concerned regulatory authorities would not treat the fraud like they would if it were a registered company.
Lack of registration with financial authorities or regulatory bodies. This lack of registration means a clear indication that the company is not following the concerned rules and regulations and may defraud the investors out of their hard earned money.
Low-quality website design, broken links, or poorly written content can indicate that low efforts have been put into the user experience of the website which is a clear indication that the operator does not intend to get investors to use the website again, rather defraud the people and close the website.
Lack of contact information or legitimate customer service channels can indicate that the business does not exist in the first place. Because customer service is one of the top priority for gold business considering the fact that there is a financial aspect to the business and customer relationship.
A lack of reviews or mostly negative reviews on independent platforms. These platforms contain customer reviews for almost all the big businesses. Absence of reviews is not a cause of concern on its own, however thai does raise suspicion and the investors should do a background check before purchasing gold in digital form
Fake reviews or testimonials that sound too scripted. This can be identified when the language, and the writing style can be seen repeating in multiple comments. This means that the platform has deployed bots to write reviews, with an intention to mislead investors looking to buy sell gold online
Verifying the platform’s registration with financial regulators. This check helps the customer verify if the website is legitimate or not, because to operate in the gold lending or digital gold space, the company should be registered as this is way to protect the customers from the regulators.
Look for Established Partnerships
Collaboration with trusted financial institutions or third-party auditors is absolutely critical when assessing if the platform is legit or not. For companies offering digital gold assets, it is essential to check if they are in partnership with other institutions which would help in storing the physical gold
Research the Platform’s Gold Custody and Security Measures
Research how gold is stored, and insured. If there is a lack of information on the official channels, then it is recommended to get in touch with the customer service team of the platform and ask questions. A legitimate business enabling investors to purchase digital gold would be transparent in disclosing the safety with which the gold is stored.
Read Independent Reviews
Seeking out reputable sources for reviews and feedback from experienced investors is another way to check the legitimacy of the business. Check online forums and ask for feedback if you know someone who has used these platforms for digital gold investment.
Check for Authentic Customer Support
Internet gold sites have become popular due to providing a simple mode of investment in gold in the form of digital gold, saving the investors from the expense of storage, and making charges. With newer ways to invest in gold made available lately, internet digital gold investment today is a great alternative to physical gold investing as it offers traditional qualities such as high liquidity, stability, and less inflationary. Online gold has also introduced access points for fraud websites that can easily cheat investors and pilfer money and personal information.
Scam gold virtual sites tend to entice consumers with unusually high returns or over-the-top statements and irresistible offers. Red flags include concealment of the company information, non-adherence to regulatory guidelines, poor quality sites, and false consumer ratings. Due inquiry into such as company registration, control of gold arrangements, and consumer ratings needs to be conducted prior to investment to protect oneself from falling prey to such websites.
To remain safe from fraud, ensure the site is registered with financial institutions, ensure there is collaboration with reputable institutions, and ensure there is safe storage of gold and security. If you ever encounter a fraud site, it is recommended to report to the authorities.