In a recent LinkedIn post, Nithin Kamath discusses the significant risks associated with unregulated digital gold and highlights safer alternatives for gold investment. Kamath, the founder of Zerodha, a prominent Indian online stock brokerage, used the platform to caution consumers about the lack of oversight in the digital gold market.
Kamath began by emphasizing the unregulated nature of digital gold, stating:
“Digital gold is unregulated. A timely reminder from SEBI.”
He further elaborated on the potential dangers, pointing out that if platforms or companies selling digital gold were to face issues, investors would have limited recourse.
The Hidden Costs of Digital Gold
Beyond regulatory concerns, Nithin Kamath argues that digital gold is an inefficient method for gaining exposure to the precious metal. He detailed the immediate financial drawbacks that investors face upon purchase. According to Kamath, investors incur a Goods and Services Tax (GST) of 3% at the point of sale. This is compounded by spreads, typically ranging from 2% to 3%, on the purchase price.
This dual impact means that, as Kamath points out, a digital gold investor is effectively down approximately 6% from the outset, even before considering any potential regulatory risks or market fluctuations. He explains the compounded effect:
“You pay 3% GST the moment you buy. Then there are spreads of another 2–3%, which means as soon as you purchase digital gold, you’re already down about 6%, and that’s before even factoring in regulatory risk.”
Safer Alternatives for Gold Investment
With the cessation of Sovereign Gold Bonds (SGBs), Nithin Kamath recommends Gold Exchange-Traded Funds (ETFs) as a superior alternative for investors looking to include gold in their portfolios. He positions Gold ETFs as one of the safest and most accessible avenues for gold investment in the current market landscape.
Kamath’s insights aim to guide investors toward more secure and cost-effective methods of gold exposure. He notes the importance of understanding these financial instruments fully:
“Now that Sovereign Gold Bonds (SGBs) have stopped, gold ETFs remain one of the safest and easiest ways to get exposure to gold.”
The post, which also references an article on Zerodha’s Daily Brief for further details, serves as a crucial advisory for individuals considering digital gold investments, urging them to weigh the risks against the perceived benefits and to explore regulated financial products instead.
📝 About This Content
This article is based on insights shared by Nithin Kamath on LinkedIn.
📅 Originally posted on November 12, 2025 | View original post on LinkedIn →