Therefore, it requires a huge investment. SGBs are issued by the RBI in consultation with the Center. Periodic windows are opened, usually every 2 or 3 months and remain open for approximately one week, for investors to buy the bonds at the issue price per gram of gold. If investors wish to make purchases outside the period, they must purchase the bonds in the secondary market at their market value.
Gold in its physical form, on the other hand, can be purchased in the form of jewelry, coins, ingots and artifacts. The 24-carat gold coins in purity and 999 in fineness are available in denominations of 5 and 10 g. Gold bars are generally 20 g in size. They can be easily purchased without a prescription at jewelry stores across the country.
Some of the jewelers also put jewelry for sale online and also deliver it at the door. Online platforms such as Amazon, Flipkart, Snapdeal, among others, also have gold coins and ingots for sale online and are known as “digital gold”. Buyers have at their disposal a variety of payment options, such as cash payments, checks, cards and digital modes such as Internet banking, Paytm, G-Pay, etc., making buying gold at any time easy today. A sovereign gold bond is a better investment than physical gold for many reasons.
Before considering whether to invest in sovereign gold bonds or physical gold, you should know what sovereign gold bonds are. If the question is to choose the options that are most secure, but liquid and that also offer benefits, the ideal would be to choose between sovereign gold bonds and gold in its physical forms. However, SGBs are a virtual investment in gold backed by a bank and generate a simple interest rate of 2.5 percent, says Shivansh Bhasin, founder and CEO of Investrology, a wealth management firm. When investing in sovereign gold bonds, there's no need to worry about theft, storage costs, or even the purity of the gold.
When you think about investments for Indians, you instantly get an idea of physical investment in gold. In addition, gold is comparatively more stable compared to other investments during market volatility. The issue price of gold bonds is usually 50 INR per gram of gold lower than the nominal value of online applications and payments. However, Indians are gradually starting to invest in sovereign gold or e-gold bonds for many reasons.
Therefore, investors with a long-term investment horizon may consider investing in these bonds, as gold prices are expected to rise in the long term. In the event of unexpected political and social disasters, gold ETFs (exchange-traded funds) will not have the same benefits as physical gold. According to tax and investment experts, sovereign gold bonds and gold ETFs (exchange-traded fund) are suitable for two different types of investors. Physical gold versus sovereign gold bonds: Having gold in an investment portfolio is essential, as it helps diversify the portfolio.
He said that in the Sovereign Gold Bond Scheme, the investor has no option of deciding the maturity date and that the maturity amount is decided based on the average closing price of gold for the last three business days before the repayment date. Gold is an asset that not only adds value to an investment portfolio, but also contributes to its diversification. However, gold cookies come in a minimum of 10 grams and, therefore, the minimum investment is slightly higher in the case of physical gold.