Gold Rates Are Increasing Globally, Should You Invest In Sovereign Gold Bond Rather Than Gold Jewellery?

Gold as a precious metal has always been considered auspicious and Indians tend to buy gold jewelleries during the festive season and in the wedding season. December to January is a wedding season in India, hence the demand for gold jewellery increased. But, if you are an investor and you are not looking for gold for ornament purposes, then there are better gold investment options for you like gold ETFs and certainly the RBI's sovereign gold bond (SGB) scheme, which is offered by the union government.

Recently the RBI has announced the eighth tranche of the sovereign gold bond (SGB) scheme for 2021-22, which will close on December 3, this year. Hence, it is a great opportunity for investors to pocket 24 carat gold bonds with assurance by the government.

For this tranche, the government has fixed the price for each 1 gm of gold at Rs. 4,791/gram. Additionally, subscribers will get Rs. 50 discount, who will bid online. At present, in India, 24 carat gold is being quoted at Rs. 4,831/grams, on November 30. The present SGB price is certainly profitable. In the previous tranche, the price was Rs. 4,732/gram. As the gold rates in the global markets have increased significantly in November, the RBI also hiked the rate. SGB prices are fixed depending on the last 3 days 24 carat gold price, as decided by the IBJA on the domestic front.

It is common knowledge that gold prices are increasing month on month as concerns over inflation are increasing in economies. The USA is experiencing the highest inflation rate now, in more than the past 30 years. The USA monetary policymakers are not ready to hike their interest rate soon, so gold rates will be on the verge of the surge in the upcoming months. Hence, for wise gold investors, it will be a great opportunity to bag the SGB scheme now. As an additional benefit, in the SGB scheme, you will get a 2.50% interest, payable half-yearly. You can have capital gains at the time of redemption if you find the gold rate at the time of redemption is higher.

(Also read: What Is RBI Sovereign Gold Bond (SGB) Scheme? Benefits And Upcoming Tranches, 2021-2022)

SGB is one of the safest gold investments, with the assurance of RBI on behalf of the union government. There also will be no worry about gold storage as the RBI will store the gold for you, and against it you will receive an official certificate for the government gold bond scheme.

(Also read: How To Invest In The Sovereign Gold Bond Scheme Recently Issued By The RBI?)