Is Your Digital Gold Really There? How Vault Audits Verify Every Gram
Buying digital gold takes a few seconds.
You choose an amount, complete the payment and see 24K gold appear in your account.
But where is that gold actually kept? How do you know an equivalent quantity of physical gold exists? And who verifies that the balance displayed on your screen matches the bullion stored inside a vault?
That is where professional custody, independent trustees and vault audits come in.
A properly structured digital gold product should connect every customer balance to real physical gold held in secure custody. Here is how that system works and what investors should check before buying.
Is Digital Gold Backed by Real Gold?
Digital gold is designed to represent ownership of physical gold purchased and stored on your behalf.
When you buy one gram of digital gold, the provider should maintain the corresponding physical gold required to back that purchase.
This does not mean that a separate one-gram bar with your name on it is placed inside a vault.
Customer holdings are generally recorded against a larger inventory of physical bullion. What matters is that:
Customer balances are accurately recorded
Total customer holdings are fully backed by physical gold
The bullion meets the stated purity
The gold is held by a professional custodian
The records and physical inventory are regularly reconciled
Independent audits verify the system
A vault audit helps confirm that the gold shown in customer accounts is supported by real bullion.
What Happens After You Buy Digital Gold?
Several organisations may be involved in a single digital gold purchase.
Your order is recorded
You choose an amount in rupees or grams and complete the payment.
Your invoice or transaction history should show:
The amount paid
The applicable gold price
GST
The quantity purchased
The purity of the gold
The date and time of purchase
The gold provider allocates physical bullion
The app through which you invest usually acts as the customer-facing platform.
The underlying gold is supplied and managed by an established digital precious-metal seller such as Augmont, MMTC-PAMP or SafeGold.
These providers maintain the physical bullion and ownership records behind digital gold products offered across multiple platforms.
The gold is stored in a professional vault
The physical gold is held by a specialised vaulting or custody company.
Professional vaults typically use:
Restricted access
Continuous surveillance
Controlled movement of bullion
Detailed inventory records
Security personnel
Insurance against specified risks
Your digital balance is reconciled with the vault inventory
Whenever customers buy, sell or redeem gold, the provider’s records and physical inventory must be updated.
If customers collectively own 100 kilograms of digital gold, the provider should maintain enough physical bullion to support those holdings.
An independent audit checks whether these numbers match.
What Does a Digital Gold Vault Audit Check?
A meaningful audit examines both the physical bullion and the systems used to record customer ownership.
Physical quantity
The auditor verifies the gold present inside the vault using records such as:
Bar numbers
Bullion weights
Vault receipts
Inventory registers
Deposit and withdrawal records
The physical quantity is then compared with the provider’s books.
Purity
Digital gold is generally sold as 24K gold with a disclosed fineness such as 999 or 999.9.
Auditors may examine refinery certificates, bar markings and purity reports. Representative samples may also be tested to verify the purity and weight of the bullion.
Customer balance reconciliation
The auditor compares the total gold held for customers with the total physical inventory inside the vault.
This is the most important test.
If customer accounts collectively show 100 kilograms of gold, there should be enough verified physical bullion to support those balances.
Custody and insurance records
Auditors may also review:
Custodian agreements
Vault access controls
Insurance documents
Bullion movement records
Storage procedures
Internal approvals
Transaction controls
Purchases, sales and physical redemptions should be correctly reflected in both customer records and the physical inventory.
Auditors may test individual transactions to identify duplicate entries, incorrect allocations or unexplained inventory differences.
Who Is Responsible for Your Digital Gold?
A properly structured digital gold product usually involves separate organisations performing different roles.
Organisation | Role |
|---|---|
Consumer platform | Provides the app, payment journey and customer experience |
Digital precious-metal seller | Sources and allocates the physical gold |
Custodian or vault operator | Stores and protects the bullion |
Trustee | Provides independent oversight |
Auditor | Verifies physical inventory, records and controls |
Separating these responsibilities creates checks across the system.
The company displaying your gold balance should not be the only company storing the bullion and verifying that it exists.
To understand these safety layers in more detail, read Is Digital Gold Safe in India?.
What Does a Trustee Do?
A trustee provides an independent layer of oversight between the gold provider, platform and customer.
Depending on the structure, the trustee may:
Review whether customer balances are backed
Monitor reconciliation processes
Review custody arrangements
Supervise specified settlement processes
Monitor compliance with agreed operating procedures
Protect customer interests under the applicable agreements
A trustee is not a substitute for regulation, but it reduces the platform’s ability to operate without independent oversight.
How DPMACI Is Strengthening Digital Gold Standards
The Digital Precious Metals Assurance Council of India, or DPMACI, is a proposed industry-led self-regulatory organisation for the digital gold and silver ecosystem.
Its founding digital precious-metal sellers are:
Augmont
MMTC-PAMP
SafeGold
DPMACI’s ecosystem also includes distributor and partner platforms such as Spare8, CRED, Amazon Pay, etc.
These consumer platforms generally make gold products from established precious-metal sellers available through their own apps rather than sourcing and storing the bullion themselves.
DPMACI’s proposed standards include:
Recognised bullion purity standards
Independent physical audits at least twice a year
Random purity and weight testing
Independent custodians
Trustee oversight
Transparent disclosure of prices and charges
Clear customer grievance-redressal processes
These standards can improve transparency across the industry. However, DPMACI remains an industry-led body and should not be confused with formal SEBI or RBI regulation.
How Spare8’s Digital Gold Is Structured
Spare8 offers digital gold through its partnership with Augmont, one of DPMACI’s founding digital precious-metal sellers.
This follows the established distributor model used across the industry: Spare8 provides the customer experience, while Augmont provides the underlying digital gold and bullion infrastructure.
Physical gold through Augmont
Gold purchased through Spare8 is 24K, 999-purity digital gold supplied through Augmont.
Augmont manages the underlying gold allocation and bullion infrastructure supporting customer holdings.
Professional vaulting through Sequel Logistics
The physical bullion is stored through professional vaulting infrastructure operated by Sequel Logistics.
This keeps the underlying gold separate from the consumer-facing Spare8 platform.
Independent oversight through Valgo Securities
Valgo Securities provides independent trustee oversight for the structure, adding another layer between the platform, gold provider and customer holdings.
Through Spare8, customers can:
Start buying gold from ₹10
Make one-time purchases
Set daily, weekly or monthly gold SIPs
Sell eligible holdings
Withdraw sale proceeds instantly through UPI, 24/7
Redeem eligible holdings as physical gold
Lease eligible gold to earn additional gold
Is Digital Gold Regulated by SEBI?
Digital gold is not currently regulated by SEBI as a security or exchange-traded investment product.
It operates through contractual arrangements between customers, platforms, gold providers, custodians and trustees.
Electronic Gold Receipts, Gold ETFs and other exchange-traded gold products operate within SEBI-regulated frameworks.
This gives regulated products stronger formal investor protection. However, it does not automatically make every digital gold product unsafe.
Digital gold safety depends on the quality of its underlying structure:
Who supplies the gold?
Where is it stored?
Is it insured?
Who provides trustee oversight?
Are physical audits conducted?
How easily can customers sell or redeem their holdings?
Digital Gold vs EGR: Which Is More Practical?
Electronic Gold Receipts, or EGRs, represent physical gold held through SEBI-regulated vaulting systems and recorded in a demat account.
EGRs provide formal exchange-based ownership. Digital gold focuses more heavily on accessibility, automation, liquidity and everyday use.
Feature | Digital Gold on Spare8 | Electronic Gold Receipts |
|---|---|---|
Physical backing | Gold supplied through Augmont | Gold held through registered vault managers |
Regulatory structure | Private custody and industry standards | SEBI-regulated |
Minimum investment | From ₹10 | Depends on the exchange product and price |
Demat account | Not required | Required |
Buying process | Directly through an app | Through a broker and exchange |
Automated investing | Daily, weekly or monthly SIPs | Not generally offered as a built-in feature |
Selling | Directly through the platform | Through an exchange order |
Access to sale proceeds | Instant UPI withdrawal 24/7 once eligible | Broker and exchange settlement process |
Physical redemption | Available subject to product terms | Through the prescribed vault withdrawal process |
Jewellery redemption | Available if value greater than 0.1gm | Not a standard feature |
Gold leasing | Available for eligible holdings on Spare8 | Not available as a built-in retail feature |
Return potential | Gold appreciation plus possible lease earnings | Primarily gold-price appreciation |
EGRs may suit investors who prioritise formal regulation and already use a demat account.
For many everyday investors, digital gold is more convenient because it can be bought in small amounts, automated through SIPs, sold through an app and converted into cash without navigating an exchange.
Read the full comparison in EGR vs Digital Gold: Which Is Better in 2026?.
Where Digital Gold Has the Advantage
Start with ₹10
You do not need to wait until you can afford an entire gram.
Spare8 allows customers to begin with ₹10 and gradually build their gold holdings over time.
Automate daily, weekly or monthly SIPs
Digital gold can be purchased automatically according to a schedule selected by the customer.
Every successful payment adds more 24K gold to the account without requiring another manual order.
Sell and withdraw through UPI 24/7
Once gold is eligible for sale, Spare8 customers can sell it and withdraw the proceeds instantly through UPI.
The withdrawal facility is available 24 hours a day, seven days a week.
This removes the need to wait for stock-market hours, place an exchange order or manually transfer money from a brokerage account.
Recently purchased gold may be subject to an eligibility period before it can be sold.
Redeem it as physical gold or jewellery
Digital gold does not have to remain inside an app.
Depending on the provider and platform, customers may be able to:
Sell their gold for cash
Request physical coins or bars
Use eligible balances towards jewellery
Certain digital gold ecosystems also support jewellery redemption through major retailers.
Eligible SafeGold balances, for example, can be used at Tanishq and CaratLane. Kalyan Jewellers also offers an Augmont-powered digital gold product that can be redeemed into physical coins or jewellery.
Eligibility, making charges, delivery fees and participating-store rules depend on the provider and platform.
Put eligible gold to work through leasing
Gold held in an EGR primarily benefits when the market price of gold rises.
Spare8 allows eligible customers to lease their gold and earn additional gold while retaining exposure to potential price appreciation.
Gold leasing opportunities may offer approximately 3.5% to 5% p.a. in additional gold, depending on the applicable opportunity and terms.
When lease earnings are combined with potential gold-price appreciation, the total potential return can reach up to 16% p.a.
This is not a guaranteed return. Gold prices may rise or fall, and lease earnings depend on the selected opportunity.
Read How Gold Leasing Works in India before leasing any gold.
Seven Checks Before Buying Digital Gold
1. Identify the underlying gold provider
Check which company is responsible for sourcing and allocating the physical bullion.
2. Confirm the purity
The platform should clearly disclose whether the gold is 24K and state its fineness, such as 999 or 999.9.
3. Check where the gold is stored
The custodian or professional vaulting partner should be identified.
4. Confirm that the bullion is insured
Check whether the physical gold remains insured while it is held in custody.
5. Look for independent oversight
A credible trustee creates an additional layer between the platform, provider and customer.
6. Check whether audits are conducted
Look for information about vault audits, reconciliation, purity verification and custody controls.
7. Understand the exit process
Before purchasing, check:
When the gold becomes eligible for sale
How the selling price is calculated
How quickly the money can be withdrawn
Whether instant UPI withdrawal is available
Physical redemption minimums
Minting and delivery charges
Frequently Asked Questions
Is digital gold backed by physical gold?
A properly structured digital gold product should be backed by physical bullion held in professional custody.
Investors should verify the underlying provider, custodian, trustee and audit process.
Does every customer receive a separate gold bar?
No. Customer ownership may be recorded against a larger pool of physical bullion.
The provider must still maintain enough physical gold to support all customer holdings.
Is Spare8 connected to DPMACI?
Spare8 offers digital gold through Augmont, one of DPMACI’s founding digital precious-metal sellers.
Spare8 forms part of Augmont’s partner-platform network rather than operating as a separate precious-metal seller.
Can I withdraw money instantly from Spare8?
Once eligible gold is sold, the proceeds can be withdrawn instantly through UPI.
The facility is available 24/7.
Can digital gold be used to buy jewellery?
Certain digital gold balances can be used through participating jewellery ecosystems such as Tanishq, CaratLane and Kalyan Jewellers.
Availability depends on the gold provider, platform and applicable redemption terms.
Can Spare8 gold earn up to 16% p.a.?
Eligible gold can be leased to earn additional gold.
The potential return of up to 16% p.a. combines possible gold-price appreciation with applicable lease earnings. It is not fixed or guaranteed.
The Bottom Line
Your digital gold should represent more than a number on a screen.
Behind it should be real physical bullion, verified purity, professional vaulting, insurance, accurate ownership records, independent oversight and regular audits.
Spare8 gives customers access to 24K, 999-purity digital gold through Augmont, with professional vaulting through Sequel Logistics and independent trustee oversight through Valgo Securities.
Customers can start with ₹10, automate daily, weekly or monthly SIPs, withdraw eligible sale proceeds instantly through UPI 24/7, redeem gold physically and lease eligible holdings to potentially earn additional gold.
EGRs provide regulated exchange-based ownership.
Digital gold gives everyday investors a simpler way to buy, automate, sell, redeem and put their gold to work.
Continue Reading
Gold and other market-linked assets carry risk. Gold prices can rise or fall. Returns of up to 16% p.a. represent potential combined returns from gold-price appreciation and applicable gold-leasing earnings and are not fixed or guaranteed. Gold leasing may involve counterparty, operational and liquidity risks. This article is for informational purposes and does not constitute financial, legal, tax or investment advice.