The fourth tranche (IVth) of the Sovereign Gold Bond (SGB) scheme for 2021-22 opened for subscription from July 12-16. The issue price for the same is fixed at Rs 4,807 per gram of yellow metal. Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.
As per experts, SGB is one of the favourite routes for retail investors looking to take exposure in gold. There is a dual benefit of investing in SGB as investors stand to gain 2.5 percent per annum fixed interest on their investment and the rise in the value of gold once the bond is redeemed.
Additionally, with SGBs, investors are not required to worry about the storage of gold as it is in a demat form. Also, there are no local taxes that a buyer needs to pay while buying.
According to Nish Bhatt, Founder and CEO, Millwood Kane International - an Investment consulting firm, the investment in non-physical gold, via digital or paper gold, is picking up pace. The high interest is on account of the recent firmness in the prices of gold in the past few weeks.
“The government on its part has been continuously trying to move investment in gold from physical to digital/ paper gold to keep a check on the currency and larger fiscal deficit. Investment in SGB is a superior alternative to physical gold. Investment in SGB saves the cost of buying, storing, and selling the physical gold bar or coins,” Bhatt stressed.
Speaking on the price of the yellow metal, Bhatt said that it has been on an up move for the past 3 weeks as US Treasury yields dropped to a 4-month low due to concerns related to the virus.
“The next big trigger for gold prices will be the Fed meeting later this month, rising inflation in the US is a cause of concern and any change in the stance on interest rates or liquidity by the Fed will have its impact on the prices. The latest variant of the virus has created uncertainties and a rise in the number of cases. Moving forward the ability to control the virus by large countries, the pace of vaccination, global economic recovery, and the rising inflation will guide gold prices,” he added.
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