Digital Gold Investing: How Online Platforms Are Transforming Access and Storage

(Image credit: Getty Images)

Once upon a time, if you wanted to invest in gold, you'd need to find a reputable dealer, verify the authenticity of the product, arrange payment and then secure transportation and storage of the physical bouillon all on your own.

For many, the result was the most expensive headache you'd ever endured. The time-consuming process made investing in gold feel like a luxury reserved for the ultra-wealthy or most dedicated of hobbyists.

Today, digital platforms are rewriting the gold investing story. You can buy gold while handing logistical headaches over to someone else. This modernization has not only streamlined the investing process but also democratized access, enhanced transparency, and fundamentally transformed gold from a cumbersome physical asset into a liquid, digital one.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Democratizing access: Gold for everyone

One of the biggest barriers to buying gold used to be the sheer cost of the endeavor. Traditionally, investing in gold would require significant upfront capital to cover the full cost of a coin or bar. Prices could be thousands of dollars. This high entry point prevented many would-be investors from adding the precious metal to their portfolios.

Digital platforms are dismantling this barrier and making gold as accessible as a low-cost ETF. Through them, you can start investing at nearly any amount using fractional ounces.

You own an interest in the metals held by the platform’s custodian through "pooled metal positions." This model is essentially the physical asset version of fractional share investing for stocks, where you can buy a piece of an asset that would otherwise be too expensive to own.

This reduced cost to invest means almost anyone can add gold to their portfolio. Some companies are even offering credit cards that invest points earned directly into digital gold. So, all you need to do is buy a cup of coffee to start investing in gold.

The age of convenience: Buy, sell, track 24/7

Alongside lower financial hurdles to investing, digital platforms are streamlining the entire gold investing process. Gone are the days of needing to navigate suppliers, authenticators, and transportation and storage providers. You can now buy and sell gold online around the clock with a few clicks of your mouse or taps on your smartphone.

Desktop sites and mobile apps for gold investing allow you to effectively keep your gold portfolio in your pocket. You can track your gold's value and trade from any place at any time. This has turned a notoriously illiquid asset into one with access even ETF investors would envy.

Digital platforms provide a blend of direct ownership and digital convenience that not even gold ETFs can achieve. Since you own the asset directly, you can always redeem your gold instead of selling it online, and have the physical metal delivered to your address.

A clearer view: Transparency and trust

Trust is paramount in any financial transaction, especially when dealing in physical goods you may never see in person. Digital platforms are enhancing industry trust through heightened levels of transparency.

These platforms may back every unit of digital gold investment with an equivalent amount of the physical metal. This is audited by a third party, and many services provide public reports that verify their inventory against all outstanding customer holdings.

Other platforms are taking this a step further by leveraging blockchain technology through gold tokenization. Each digital token represents a specific weight of physical gold, and every transaction is recorded on the blockchain to create a transparent and immutable, auditable trail.

The ultimate lockbox: Cost-effective and simplified storage

When you own physical gold, the question becomes where to keep it. You're responsible for finding a secure storage location, be it a home safe or insured vault, and covering the associated storage and transportation costs. With digital gold platforms, this is all handled for you.

Many platforms partner with trusted, third-party storage companies where your gold is stored in high-security vaults. You may have your choice of domestic and international custodians, including top names in the industry like Brinks and APMEX.

The storage fees are typically bundled with insurance and auditing services in a single annual fee. This is often calculated as a percentage of your gold's value, much like the expense ratio you'd pay on an ETF.

What's more, that price may be even lower than the expense ratio you'll find on many gold ETFs, although minimums may apply. For small balances, this approach is often considerably less expensive than managing private storage.

Not a perfect picture: Understanding the risks

A game of chess is being played with one gold piece

While digital gold investing has much to offer, it’s important to acknowledge the risks before investing. The primary risk with digital gold is counterparty risk. You're counting on the platform and its custodian to maintain security and honor your claim to the gold you own if and when you want to sell or redeem. This makes performing your due diligence before investing essential.

To help you identify trusted partners in the industry, look for platforms that:

Use reputable, third-party depositories.
Provide regular, independent audits of their holdings.
Offer clear and transparent fee structures, including the transaction costs and those applied to storage, transportation and redemption.
Have strong cybersecurity measures, including multi-factor authentication.

By choosing a reputable and well-regulated provider, you can minimize the biggest risks while taking full advantage of the revolution that digital platforms are bringing to gold investing.

The best platforms pair gold’s time-tested value with modern tech’s speed and transparency. The result is a simpler, more appealing option for a new generation of gold investors.

Coryanne Hicks is an investing and personal finance journalist specializing in women and millennial investors. Previously, she was a fully licensed financial professional at Fidelity Investments where she helped clients make more informed financial decisions every day. She has ghostwritten financial guidebooks for industry professionals and even a personal memoir. She is passionate about improving financial literacy and believes a little education can go a long way. You can connect with her on Twitter, Instagram or her website, CoryanneHicks.com.