Tag: Sovereign Gold Bond

Sovereign gold bonds open for subscription; here’s what makes it an attractive investment

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The ninth tranche (IXth) of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday. The issue price for the same has been fixed at Rs 5,000 per gram of the yellow metal. Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.

This subscription of bonds will close on January 1, 2021, and the settlement date for the same is January 5, 2021, as per the Reserve Bank of India (RBI).

According to Nish Bhatt, founder and CEO, Millwood Kane International, the government has seen good demand for SGB throughout the year. As per an estimate, the RBI has helped the government raise nearly Rs 23,000 crore in the past 5 years.

“SGB is one of the favorite routes for retail investors looking to take exposure in gold. There is a dual benefit in 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,” he explains.

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.

Talking about the performance of gold in 2020, Bhatt tells that yellow metal has had a phenomenal year, with gains of nearly 28 percent in rupee terms (YTD).

After a double-digit gain in 2019, this will be the second year in a row that gold will be posting a stellar rise.

As we approach 2021, Bhatt believes that gold will remain in focus for investors, as central banks across the globe have pledged to keep rates low, and easy liquidity to aid growth. The latest installment of the stimulus package from the US government will add to the existing dollar liquidity in the system and may end up weakening the greenback.

“The efficacy of the vaccine, proper implementation of the vaccination process in developing countries, low-interest rate regime, and the global central bank’s stance on liquidity will guide gold prices in 2021,” he expects.

Vaibhav Saraf, director, Aisshpra Gems also expects the momentum to continue in 2021.

“The weakening dollar is also helping gold rally. The gradual pace of economic recovery also means that an elevated gold environment is to stay for a few years at the least,” he believes.

As per Snehal Choksey, director, Shobha Shringar Jewellers, the bull run that has started will touch $2,400 per tory oz. in the long term.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

How to invest in gold with little money?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Authored by Harsh Jain

Gold has always been a crowd-puller. Many Indian families purchase physical gold either in the form of gold coins or jewellery. However, with the current prices of the yellow metal ( worth of Rs 50,000 for 10g), coupled with the financial difficulties and liquidity issues several people had to face owing to the pandemic, how does one purchase gold this time?

Turns out, you don’t have to wait to accumulate a large amount of money to buy gold. Today, digital gold, gold ETFs, gold mutual funds, SGBs and other avenues of gold investment are highly accessible to people, even to those lacking any experience in the field of investments.

Thus, when the immense prices of gold create difficulties in physical ownership, you can choose to acquire the metal digitally for you and your loved ones against minimal costs this festive season. Here’s how:

Different Ways to Invest in Gold against Minimal Expenses

Digital gold

Digital gold is a convenient and cost-effective way of purchasing gold online in small fractions (as low as Rs 10 ) You can buy, sell and accumulate gold of 99.9 percent purity anytime at the prevailing market price. The digital gold you purchase is stored in secured vaults and insured. Certain investment platforms also allow you to acquire your owned asset in physical form. Besides this, the increased convenience for people, especially those with no prior knowledge of investments, is an added benefit for digital gold. Today, almost anyone with a smartphone can start investing in gold from the comfort of their homes.

Gold ETFs
Gold exchange-traded funds are bought and sold directly through the stock market. Thus, owning such a gold asset on paper is almost similar to physical gold ownership. The prices of the gold stocks closely resemble those of its prices in the market as well. All you need to start investing in ETFs is a Demat account.

Gold Mutual Funds

These funds invest in gold reserves directly or indirectly. They usually invest in stocks of mining companies, physical gold, and stocks of gold producing and distribution syndicates. The performance of these funds is usually linked with the performance of gold prices in the country.

Sovereign gold bonds

SGBs are issued by the Reserve Bank of India, offering assured returns of 2.5 percent every year. The minimum amount that you can invest in these bonds is equal to that of the value of 1 gm gold.

However, such bonds are not available at all times. Instead, the RBI opens periodic windows during which it sells these to investors. However, this investment makes for a viable option if you are looking to invest for the long-term. The maturity term for SGBs is 8 years.

Apart from these, many jewellers across the country offer gold savings schemes that allow people to invest in instalments. Typically, a jeweller allows you to deposit a fixed amount every month for a specific period. At the end of the tenure, you can buy gold from the same jeweller at a value equal to the amount deposited plus a bonus (if offered by the jeweller). The gold can be purchased at the prevailing gold price upon reaching maturity.

As you can see, gold ownership is no longer limited to what you have in your bank and home lockers. You also need not spend lakhs on securing the gold for ownership. Today, through investments with nominal expenses, the prospect of owning the precious metal has undergone a massive transformation. Therefore, this season, give digital and paper gold a shot!

Harsh Jain is Co-founder and COO at Groww

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign Gold Bond scheme opens for subscription ahead of Dhanteras; should you invest?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The eighth tranche of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday, a few days ahead of Dhanteras. In India, buying gold is considered auspicious during Dhanteras and Diwali.

The issue price for the same has been fixed at Rs 5,177 per gram of the yellow metal. Online subscribers can secure these bonds at a discount of Rs 50 per gram.

This subscription for the same will close on November 13, according to the Reserve Bank of India (RBI).SGB is a certification scheme in which the RBI issues bonds on behalf of the government of India. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. The bonds are redeemed in cash on maturity.

The Sovereign Gold Bond (SGB) is restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.

These bonds are sold through scheduled commercial banks (except small finance banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, according to RBI.

It bears interest at the rate of 2.5 percent per annum on the amount of the initial investment.

The minimum permissible amount allowed for investment in SGB is one gram of gold. The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time. In the case of joint holding, the investment limit of 4 kilograms is applied to the first applicant only.

According to financial experts, SGB is a good bet when it comes to gold investment, because of its price appreciation feature which no other gold investment offers.

According to Nish Bhatt, Founder and CEO, Millwood Kane International – an investment consulting firm, SGB is an effective way to invest in non-physical gold, wherein an investor does not have to worry about the storage of gold as it is in a Demat form and there are no local taxes that a buyer needs to pay if buying physical gold.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign gold bond’s 7th tranche to close on Friday; here’s all you need to know

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The seventh tranche of the Sovereign Gold Bond (SGB) Scheme 2020-21 opened for subscription on Monday. The Reserve Bank of India (RBI) has fixed the issue price of this tranche, which will close on Friday, at Rs 5,051 per gram. Investors who make payments through digital mode can get a discount of Rs 50 per gram during this tranche.  For them, the issue price will be Rs 5,001 per gram.

SGB is a certificate scheme in which the RBI issues bonds on behalf of the government of India. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. The bonds are redeemed in cash on maturity.

SGB is restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.

These bonds are sold through scheduled commercial banks (except small finance banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, according to RBI.

The minimum permissible amount allowed for investment in SGB is one gram of gold. The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time. In the case of joint holding, the investment limit of 4 kilograms is applied to the first applicant only.

According to experts, SGB is a good bet when it comes to gold investment as it pays interest of 2.5 percent along with the price appreciation which no other gold investment offers.

However, one must remember that investments in SGB can result in a capital loss as the bond value is directly linked to the price of gold in the international markets. If the price at which investors bought the bond is higher than the price at which they redeem it at maturity, they might end up in a loss.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SGB subscription closes today; here’s how you can invest in it online

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sovereign gold bond (SGB), for which investors get a holding certificate, comprises of government securities denominated in gold wherein investors are required to pay the issue price in cash. SGBs have recently emerged as one of the most sought after products among investors.

According to Debajit Saha, senior analyst, Precious Metals at Refinitiv, investors have purchased 17 tonne of gold using SGB between April and August this year.

Saha said so while quoting Reserve Bank of India (RBI) data.

The sudden rise in demand for this type of product may have been borne out of necessity, Saha added. Additionally, this indicates that investors’ preferences for their investment options are changing.

With the last installment (series VI) of the ongoing SGB scheme closing for subscription on Friday, some investors may still be looking to invest in it.

Such investors can invest in SGBs via online banking or through their demat accounts.

To invest through banks, customers will need to log into their net banking account. The bank page will show the SGB option (mostly in investment options). It can also be available on the bank’s home page or under services.

“Generally during an ongoing tranche, banks display SGBs on their homepage itself for better visibility. Since users have a net banking account with a bank, it is safe to assume that they are already KYC compliant. So, when they land on the registration page, they might or might not get a pre-filled form depending on the bank they are associated with,” explains Tushar Bopche, product head – AUM Business, YES Securities.

SGB application forms ask for name, address, guardian’s name in case the investor is a minor, PAN number, and so on

For buying bonds through brokers/exchanges, investors should have demat and trading account with BSE/NSE. As all details and KYC are already there with traders via demat accounts, investors just have to select quantity and submit online.

“Investors can also call their relationship manager or customer care to confirm the order online,” further explains Bopche.

The added advantage with brokers is that investors can see the rates live and sell them any time they want.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign gold bond scheme: Should you invest in it with gold at all-time high?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Series-V of the sovereign gold bond (SGB) scheme 2020-21 opened for subscription on Monday and will end on Friday. This issue is available at a time when gold prices are trading at record highs.

As far as investing in SGB is concerned, it is generally considered a good bet as it provides interest along with price appreciation which no other gold investment offers.

However, with gold prices having risen sharply this year, some investors may have second thoughts over whether they should go for SGBs. This is because the current rates are much higher than the issue price of the first tranche.

The issue price of tranche V has been fixed at Rs 5,334 per gm, compared to  Rs 4,639 per gram in the first tranche, in keeping with the rise in gold price, though the SGB price is still less than the market price.

But before investors think of investing in SGBs, they should take a step back and first focus on their asset allocation.

Gold is traditionally used as a hedge against inflation and it is advisable to allocate up to 10-20 percent of investment portfolio in the yellow metal, says Nish Bhatt Founder and CEO, Millwood Kane International.

This means somebody who already has the required allocation in their portfolio shouldn’t invest further.

“Gold has had a phenomenal run this year, with an appreciation of over 36 percent since the start of the year, but past performance is no guarantee for the future,” says Bhatt.

On the other hand, investors who do not have proper allocation to gold may invest in SGBs.

SGB is an easy route to enjoy exposure to the yellow metal as it is a substitute for physical gold, can be easily sold through banks and designated government offices. Investors get an annual interest rate of 2.50 percent and capital gains at maturity, if any, are tax-free.

Investors who may miss investing in SGBs, still have a chance as the sixth and the final tranche of the issue will open from August 31, 2020 till September 04, 2020 and online subscription will get a discount of Rs 50/gm.

SGBs, meanwhile, can also be bought from secondary market, that is buying it at the exchange from investors who had purchased previously and wish to sell.

“The liquidity in SGBs is a little less in case of secondary markets. So, sellers cannot sell it at more than the current prices,” says Ketan Kothari, Director of Augmont.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold bond issue price fixed at Rs 5,334 per gram

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The issue price for the sovereign gold bond has been fixed at Rs 5,334 per gram, the RBI said in a statement on Friday. The Sovereign Gold Bond Scheme 2020-21-Series V will be opened for subscription from August 3-7, 2020.

The issue price for the bonds (series IV) that were open for subscription from July 6-10 was Rs 4,852 per gram of gold.

“The nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period…works out to Rs 5,334 per gram of gold,” the RBI said.

It further said the government, in consultation with the RBI, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

“For such investors, the issue price of gold bond will be Rs 5,284 per gram of gold,” the central bank said.

The central bank in April had announced the government will issue Sovereign Gold Bonds (SGBs) in six tranches beginning April 20 till September.

Sovereign Gold Bond 2020-21 is issued by Reserve Bank India on behalf of the Government of India.

The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram and the tenor of the SGB will be eight years with exit option after fifth year to be exercised on the interest payment dates.

The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.

The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal (April-March).

The gold bond will be sold through banks (except small finance banks and payment banks), Stock Holding Corporation of India (SHCIL), designated post offices, and recognised stock exchanges (NSE and BSE).

The sovereign gold bond scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings – used for the purchase of gold – into financial savings.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indians wake up to electronic gold investment but physical gold still plays first fiddle

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As gold prices hit all-time highs for a second straight week, it’s worth pondering whether Indians should relook the way they invest in the yellow metal. It is estimated that Indian households have accumulated more than 25,000 tons of gold over the years, and this does not include the deep coffers of the temple trusts. The country after holding the first place for many years in the global market is now the second-largest consumer of gold after China.

India sees gold as wealth, status symbol, and ornament. Gold reinforces the closeness of relationships, has a high emotional quotient and cultural significance among buyers. Most Indians buy gold as jewelry, bars, and coins. And on all these purchases you pay making charges, a brand premium – which is irrevocable at the time of resale. About 49 percent of global gold is used to make jewelry.

The reason individuals go for physical gold as there is no involvement of broker, no contract, you don’t have to disclose your buying and holdings.

As financial professionals debate on how gold bought this way isn’t an investment, Indians have been smart to use this gold while buying a new house, for wedding expenditure, for education and to pay off loans. Rural India also saves in the form of gold and silver and use it at a time of need.

Electronic gold investment picks up

India also has been quick to adapt to the financial instruments for including gold in its investment portfolio. There are changes evident in India’s $34 billion gold industry. The Gold ETF and Sovereign Gold Bonds have seen record response from investors amid lockdown.

The Gold ETF‘s have seen purchases worth Rs 3,500 crore, while the Gold SGB buying has been to the tune of Rs 5,000 crore in 2020. The cost of owning gold this way is much lower as there is no entry cost in SGB and it also gives 2.5 percent interest on your investment. These are the easiest and safest ways to invest in gold.

Gold does not give dividends and hasn’t given the best of gains in many years as compared to other asset classes but has proved itself in a tough time of uncertainty as we see now.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Too many gold investment options confuse you? Here’s how to find what’s right for you

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold investment is considered as a means to bring financial security in one’s portfolio. From buying gold in physical form to investing in paper gold such as gold exchange-traded funds (Gold ETFs) or sovereign gold bonds (SGBs), there are several options available in the market.

However, too many options may confuse investors and they may be left wondering which investment mode suits them more.

In view of this, let’s discuss different parameters of investments and see which options suit the needs more:

Liquidity

Liquidity is an essential factor when it comes to investing. Most people want to invest in schemes that are easily accessible.

When it comes to investing in the yellow metal, gold ETFs offer better liquidity, says Ishu Datwani, founder, ANMOL — a jewelry entrepreneur.

Unlike gold funds, ETFs don’’ have any exit loads, which means investors can buy or sell the units at any time during the market hours. Units of gold funds can be redeemed by selling them back to the fund house based on the NAV for the day.

On the other hand, SGBs are invested for 8 years with an option to exit from the fifth year onwards.

Better Returns

Needless to say, any investment is done with the motive to earn returns. Sovereign Gold Bonds or SGBs are the best choice when it comes to returns, say experts.

Apart from capital appreciation, SGBs offer an extra 2.5 percent return per annum.

Investment Limits

While there is no limit on purchasing physical gold, gold ETFs and SGBs have minimum investment limits. SGBs also have maximum limit, while there is no such limit in ETFs.

Taxation

Investment in physical form is taxable like any other capital asset.

“If gold is held for more than 3 years, it is taxable as Long Term Capital Gain (LTCG) at 20 percent (exclusive of education cess and surcharge) and Short Term Capital gain is taxable at normal tax slab applicable to the investor,” explains Gopal Bohra, partner, NA Shah Associates. Gold ETFs/gold MFs are also taxable like physical gold.

On the other hand, the interest earned is taxed as income from other sources in case of SGBs. In case the bonds are held to maturity, the capital gains are tax-exempt, which makes it a better option.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow