The Government of India has announced Tranche 4 of the Sovereign Gold Bonds 2016. They are available for subscription from July 18 to July 22, 2016.
Here are 2 links with all the details that you need to know about these Bonds.
Before you rush to buy the bonds, here are a few points for you to consider:
ONE. You will not have real physical gold in your hand. So, if you think that in a year, when there is a family wedding, you would just use this gold to make that piece of fine jewellery, sorry, that would not be easy.
Yes, it can be. If you have a demat account then you can sell the bonds or a part of them on the exchange and then do the needful. Remember you will incur capital gains tax when you sell before maturity.
TWO. In case you are thinking that when World War 3 breaks out and the paper currency remains of no use, your gold bonds will be the universal currency to buy anything you want, I am afraid to say you are being too optimistic.
This is just a bond, a piece of paper and not real gold. It might have some value due to its underlying asset as Gold but it surely is no equal to the shiny yellow metal itself.
THREE. Gold continues to remain an investment of choice in uncertain times. I think the word “investment” is wrong. Gold is a preserver of value, of purchasing power.
If you are investing in Gold Bonds for the returns, you might end up disappointed. There are a few smart people out there who think that since dollar is going to depreciate, Gold prices would rise. Good luck to them.
I guess, you want to sleep peacefully at night.
Why should you invest in Sovereign Gold Bonds 2016?
If you have made long term allocation to Gold in your portfolio. This is a great way to get that allocation working for you. You might also be saving a bit every year for your child’s marriage, choose this way.
Oh yes, the bonds offer a 2.75% fixed interest rate every year. That’s a clear bonus, actually an incentive for you to hold a bond than physical gold. On top of that, you get market price when you sell.
If you hold till maturity, that is 8 years, you don’t incur any taxes too.
So, are you investing?
Remember the tagline of the Sovereign Gold Bonds is Invest Wisely. Earn Safely.