The Sovereign Gold Bonds 2017-18 are now open for subscription and would close on April 28. Here are a few details on these bonds and why you should invest in the same.
Issue price lower than current market price
The issue price of Rs 2,901 per gram is lower than the current market price. In fact, the price of gold is now close to Rs 30,000. The government tends to offer a discount of Rs 50 based on the issue price of the bond, which is based on the simple average closing price (published by the India Bullion and Jewellers Association) for gold of 999 purity of the week preceding the subscription period.
There are no gold schemes that offer you an interest. The government Sovereign Gold Bond Scheme offers an interest rate of 2.75 per cent. So, what you get as returns is capital appreciation, if gold prices rise and also an interest rate of 2.75 per cent, irrespective of whether gold prices rise or fall. The interest on the Sovereign Gold Bonds are paid half yearly. This is not a bad proposition at all, though the interest earned is very much taxable.
Also read: A beginners guide to investing in gold
How to Buy the Sovereign Gold Bonds?
You can buy the Sovereign Gold Bonds through the post office, the Stock Holding Corporation of India or through the stock exchanges. But, we suggest that you buy the bonds through your broker if you have a demat account, as this will eliminate the need for physical certificates and it would be easy to trade and sell.
What is the minimum amount of Sovereign Gold Bonds 2017-18 That One can Buy?
The minimum quantity of bonds that one can buy is 1 gram of gold, which is equal to 1 gram of the Sovereign Gold Bond Scheme. The maximum amount that one can buy is 500 grams. It is important to remember that the scheme is now open and would close on April 28.
Why you should invest in the Sovereign Gold Bonds 2017-18?
We are living in volatile times. We are presently seeing threats of nuclear war from North Korea, volatile elections in Europe and dropping of a large size bomb recently in Afghanistan. When these kind of events occur, what does happen is that investors take shelter in gold, which tends to rally.
We believe that volatile times will lead to gold gaining, which is why you should have at least 10 per cent invested in gold. This is one of the biggest reasons to invest in the Sovereign Gold Bonds 2017-18