You can now lease your digital gold to earn extra income through SafeGold’s new product called GAINS. The homegrown platform for digital gold will allow consumers to lease individually owned gold that will help in income generation rather than mere accumulation. Apart from bringing additional income, gold that is leased out through the platform can be sold immediately at the end of the lease tenure, which is typically between 3-6 months. Assuming the annualised price growth of 11 per cent on gold in the past 5 years and expected yield between 3-6 per cent, the company aims to offer 14 to 17 per cent .
Gaurav Mathur, founder and MD, SafeGold, stated, “There is potential for gold to be a strategic income-earning asset. At SafeGold, we want to empower consumers and jewellers alike to tap into India’s household gold reserves and reinvigorate gold as an asset class. This will potentially also reduce India’s dependence on gold imports while driving a structured and simplified gold metal lease offering for MSMEs.”
To begin with, the product shall be open only to holders of digital gold, but a service offering doorstep pick up of customers’ idle physical gold coins and bullion is expected to be rolled out shortly. How does gold leasing work?
MSME jewellers will be able to list their leases on the SafeGold platform once the jeweller has been thoroughly vetted for creditworthiness and KYC verified.
Jewellers listing their lease choose the yield rate and tenure they wish to offer and provide a bank guarantee covering at least 105 per cent of the value of the gold to be leased. In the event a jeweller defaults, SafeGold would enforce the bank guarantee on behalf of customers who have leased the gold
Customers view the listed leases and commit at least 0.5 gm of their gold balance to the lease of their choice. SafeGold facilitates the lease by physically transferring the gold from the customer’s account to the jeweller’s account. At the end of the lease tenure, the jeweller settles the gold back to the vault, and SafeGold updates the customer balance. The company will be responsible for ensuring physical purity standards are maintained throughout this process. Customers have the option to re-lease, sell or take physical possession of their gold balance.
For the period of the lease, customers cannot sell, exchange for jewellery or take delivery of their committed gold balance. Jewellers have the option of a flexible tenure lease where they settle the gold back before the maturity of the lease.
Customer yield is calculated on a daily basis and accrues to their digital gold account each month. Yields are expected to be between 3-6 per cent (depending on jeweller choice and loyalty incentives offered by SafeGold).