Sovereign Gold Bonds – Traditional Gold goes Digital
Gold as an asset class has been proving many a people wrong time and again with
the say it has bounced back. The Question arises, why do you need to buy a jewelry
– if you are looking at investment in GOLD? The clear answer & alternate to physical
jewelry is Sovereign Gold Bond. Sovereign Gold Bonds are government securities issued
by Reserve Bank of India on behalf of the Government of India. They are denominated
in grams of gold and can be purchased instead of physical gold & carries an interest
rate of 2.5% per annum on holding value. You get benefited with no wastage or making
charges, enjoying the appreciation in gold value in total.
Investors can buy these bonds through Exchange at issue price when RBI announces
a fresh sale or they can purchase it immediately through Exchange at current price
like any other security.
Investors can redeem these bonds for cash upon maturity of the bonds or can sell
it on BSE/NSE at current prices.
The bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the
amount of initial investment. Interest will be credited semi-annually to the bank
account of the investor and the last interest will be payable on maturity along
with the principal.
The bonds will be available both in Demat and paper form.
The bonds will carry sovereign guarantee both on the capital invested and the interest.
The bonds can be used as collateral for loans.
No STT or Capital Gains Tax (as per Government of India guidelines)
Advantages of Sovereign Gold Bonds
Superior alternative to holding gold in physical form.
Risks and costs of storage are eliminated. Investors are assured of the market value
of gold at the time of maturity and periodical interest.
No issues like making charges and purity in the case of gold in jewelry form.
Held in the books of the RBI or in Demat form eliminating risk of loss of scrip