How it works
You pay a platform, which buys physical gold and records an allocation against your account. The metal sits with a custodian in an insured vault. You can typically sell it back, keep accumulating, or redeem it as coins or bars delivered to you.
Nothing about that model is inherently unsound. Everything depends on whether the allocation is real, verifiable and insured.
The questions that matter
Is the backing 1:1 and allocated to customers rather than pooled against the platform's balance sheet? Who is the custodian? Who audits the vault, how often, and is the report published? Is the metal insured, and for full replacement value?
What is the redemption process — minimum weight, making charge on coins, delivery timeline? What is the spread between the buy and sell price, and are storage fees charged after a period? Who is the named grievance officer?
Why the Council runs an SRO for it
Digital gold falls between regulators. The Council's Digital Gold Wing sets binding standards on allocated backing, independent vault audit, insured custody, defined redemption and buyback, fee transparency, KYC and source integrity, a named grievance officer and quarterly attestation.
Accredited platforms are listed publicly with their seal status, and the enforcement ladder runs from notice to suspension to withdrawal of accreditation.
Digital gold versus the alternatives
Against physical jewellery, digital gold avoids making charges and storage risk but adds platform risk. Against coins and bars, it is more divisible but you do not hold the metal. Against gold funds, it gives an eventual claim on physical metal rather than paper exposure.
For most buyers it works best as an accumulation tool — small regular purchases redeemed into physical metal at a meaningful weight.