Since its inception in 2015, the Sovereign Gold Bond (SGB) scheme has become a preferred choice for participating in gold, especially in the non-physical mode category. Investing in gold bonds is similar to investing in gold bullion without the bother of storage and security. This is what sets these gold bonds apart from others in the market. The best aspect is that you can invest offline as well as online through a variety of platforms. The Reserve Bank of India (RBI) is responsible for the retail distribution of government bonds to financial institutions like banks, post offices, and other similar outlets. While there are many entry points into SGB, this may be a quick overview of some other perspectives on SGBs. As corona’s new variant Omicron BF.7 creates tremendous panic in china and other countries, prices of gold may tend to rise due to its inherent properties. So investing in SGB can be a good idea for some capital gain opportunities.
What are Sovereign gold bond?
Sovereign gold bonds (SGBs) are gold bonds issued in exchange for a fixed amount of gold. Simply, these are the bonds that can be purchased for between 1 gram and 4 kg per person each year. Carrying SGB is precisely like holding physical gold without the hassles of capacity, carrying charges, protections, locker expenses, etc. You’ll be able to hold SGBs as RBI-issued certificates or in your Demat account. The value of the SGB moves in tandem with the price of 24-karat Gold.
Features of SGBs
- Sovereign gold bonds or SGBs are a non-physical strategy for holding gold. The valuation of the gold bond goes up or goes down in pair with the price of gold. The SGB regularly carries interest at the rate of 2.5% per annum and is payable half Yearly. Typically this is extra income to the SGB holder except for the capital gains they make from the appreciation of the cost of gold.
- The SGBs are denoted in grams of gold. The government co-jointly guarantees your holding in terms of gold weight and the installment of interest at the rate chosen from time to time. That makes the bond free from the chances of default.
- SGBs have a fixed lock-in period of 8 years. In any case, the government does give an exit within the frame of a liquidity buyback window after the fifth, 6th, and seventh year. Most importantly capital gains made on transactions of SGBs are completely free from taxes if it is held for a time span of 8 years. But here is an exception also. Holding less than 3 years invites short-term capital gain (STCG) tax and holding between 3 to 8 years is a long-term capital gain (LTCG) tax assessment.
- The popularity of SGBs as a hedging instrument is on the rise. Gold usually moves opposites in comparison to other asset classes like equities, due to its fundamental properties. In a time when volatility in the market is a new normal, sudden rise in Covid cases, and recession is on the doorstep, gold can be a great support for any market participants.
You can also gift sovereign gold bonds to your close friends, family members, or relatives. Due to Indian investors’ infatuation with gold, many parents choose to give their children sovereign gold bonds rather than actual gold, which is more difficult to handle. You can also give your loved ones the opportunity to follow changes in gold prices by giving them a sovereign gold bond.
How to Invest SGB with Moneysukh?
SGB forms can be obtained from selected vendors or the RBI website. Following the government’s announcement of a tranche of SGBs via the RBI, the price is also disclosed. The scheduled banks, post offices, Stock Holding Corporation of India (SHCIL), NSE, and BSE are places where such applications for gold bonds can be made physically. However, applying for gold bonds online is a better idea. You can apply for SGBs online if you have a trading account with us. Simply you have to call our support number 9638238000 and ask for applying online.