Investment is the right way for building wealth. The kind of wealth that would help develop a better lifestyle for the family, fund the retirement period and even endure the financial crisis. More than anything else, the Covid-19 pandemic has taught everyone the importance of maintaining cash reserves. As governments proclaim that the worst is behind us, the salaried middle-class population is now venturing into the world of investments.
The best investment options in the upcoming years include high-yield savings accounts to S&P 500 index funds. It is the urgency for creating an investment portfolio that has shot up the popularity of cryptocurrency across the world. The one important aspect to consider here is the risk element in all these options. Generating wealth is one part of the story and sustaining it is another. That is exactly where the success story of the commodity ‘Gold’ lays in the history of our economy.
Even though it is not considered legal tender, its value will never be undermined. This is the reason why most of the central banks and financial organizations in the world hold possession of more than one-fifth of the global gold reserves. The fact of the matter is, Gold is the oldest form of currency. It predates all the current ones and will continue to exist even after most currencies depreciate in value. The only issue with investment in Gold is that it is not immune from theft and impurities and is not easily accessible.
However, in this digital age, there has been a sudden spurt of cost-effective smartphone-based platforms for buying, holding, selling, and sending digital gold for long-term savings. These platforms are guaranteeing the highest level of safety, security and trust in the gold business. One such company is the US-based Gilded, which is available over the android and Apple iOS platforms for free.
Gilded is currently operational in 12 countries including India, South East Asia, Turkey, the Middle East and more. Registered in Jersey, Channel Islands, with the Jersey Financial Services Commission, Gilded handles Swiss refined gold with 0.999 fineness and is compliant with all London Bullion Market Association (LBMA) gold bar specifications.
Molding the new Gilded Age
Southeast Asian countries like India, China, Indonesia, Malaysia, and Thailand have a deep-rooted affinity towards the ‘yellow’ metal. However, in Europe, only Switzerland and Germany show similar affections for gold. Middle East regions and Turkey are the other two regions with similar fondness. Latin America is generally found to favour gold less. We spoke to Ashraf Rizvi, founder and CEO of Gilded to get more in-depth perspective of the global gold market.
With over 13 years of experience at UBS Holding, Ashraf has held a variety of roles in New York and London. Starting as an FX options trader on the trading floors in Philadelphia, Chicago and New York, Ashraf was a senior member of the FX team at Susquehanna Investment Management, one of the large independent traders in the world. Sharing his insights, Ashraf describes, “My time at UBS has taught me that the gold market is about geography and socio-economics. In certain geographies, the wealthier you are, the more you yearn for gold but in countries like India and China, everyone wants to own gold, irrespective of their wealth status. Today, as the currency is devaluing, people want to hold assets that sustain value and at the same time give the freedom to borrow against it without having to sell it.”
Gilded is hoping to see the benefits of progress more equally shared during this ‘4th Industrial Revolution’, which they call the new Gilded Age. The company believes that a financial institute could contribute to the betterment of society while also being relevant in the cut-throat competitive segment.
The Gold standard of Digital investment
The gold purchased through Gilded are sourced from the Swiss refineries and stored in a fully-insured non-bank vault in Switzerland. As soon as the customer makes the purchase through the app, he/she will be provided with the gold bar’s serial number, refinery, and vault location along with a picture of the exact gold bar. It is further revealed that the entire transaction is recorded on the blockchain for added security.
Speaking about his operations in Asia, Ashraf Rizvi, founder and CEO of Gilded said, “Today, as the currency is devaluing, people want to hold assets that sustain value and at the same time have the freedom to borrow against it without having to sell it. Some of the big exchanges like the Chicago mercantile exchange (CME) or International continental exchange (ICE) both take gold as collateral that you can pledge for trading purposes. Banks accept gold as collateral for which you could get loans. Accessibility to such secured loans is good for the consumers and the financial system, especially during such pandemics.”
During a discussion over a zoom call with Ashraf Rizvi and International Business Magazine, the government’s stringent hold over gold deposits and possessions by the financial services firm was taken note of. It was largely accepted that the assets should be available to the consumers at all times. The regulators should make sure that the companies are operating legally. They should be properly registered and have proper oversight in the places that they operate. Ashraf explained, “Digital Gold can never be like one of the cryptocurrencies. The reason why many are opting for cryptocurrencies is that most of them have lost faith in their country’s currencies. The more you control and prevent people from owning gold, the more you are going to push them into the cyber world and purely digital, virtual world of cryptocurrencies, which is a big risk for the government because they have no control over there whatsoever.”
Achieving financial goals Digitally
India is benefitting from remittances of around 70-75 billion USD inbound annually. It is one of the largest recipients of inbound remittances in the world. Most of it is coming through UAE. There are over a billion people across the globe who do not have access to the banking system but operate a smartphone. Digital Gold has the potential to open a new avenue of opportunities to all the aforementioned people.
Ashraf predicts, “In the next five years, digital gold will become mainstream just like digital payments have become in India and it will be just another mechanism to own the asset at the end of the day. In due time, it will become bigger than ETFs. Similar to the physically held Gold, the owners of Digital Gold are already capable of earning a return, lend or borrow against it and send it instantaneously over the network from anywhere to anywhere and at any time.”
Gilded and many other similar platforms are making gold digital, mobile and easily accessible. It is giving the less fortunate ones a chance to plan their financial goals, invest in an asset, and leverage the ubiquitous smartphone device for wealth generation.
On a closing note, Ashraf revealed to us, “Gen X and older generations tend to be more inclined towards spending on gold during festivals. Digital gold is appealing to generations across, be it Gen Z, millennials or older generations, as it allows Indians to marry traditions with a digitally savvy lifestyle. Indians can easily buy Gilded gold through a mobile app with minimal effort and gift it to loved ones across the country to celebrate the auspiciousness while saving 6-10% as compared to published Indian gold prices.”
Article by Ujal Nair
