Personal Finance

Sovereign Gold Bonds: Safer Than Raw Gold To Invest?

Sovereign Gold Bonds: Safer Than Raw Gold To Invest?

Gold is one metal every Indian wants to posses. Females in India are fond of gold therefore there is dominance of gold in jewellery market. Although some people think that it is not an attractive investment but still they end up investing to make their wives happy. Some of the schemes launched ahead of Diwali by the government are useful for an individual. Below are three schemes launched:

Gold Monetization Scheme 2015:

Deposit your gold with the government and start earning interest rate of 2.25% per annum.

Sovereign Gold Bonds Scheme:

Buy paper gold in terms of gold bond and earn interest of 2.75% per annum.

Gold Coins:

Government has issued gold coins with 5 gm and 10 gm denomination. 20 GM Bars will also be issued by the government under this programme.

Some features you must know?

  • People can deposit their gold with government instead of keeping in the bank lockers. This will also save them the some interest on the monetized gold.
  • Citizens possessing raw gold face risk of theft. This scheme can help you reduce some risk for you.
  • Minimum limit of deposit is 30 grams and there is no maximum limit.
  • The interest on the deposit will also be denominated in gold. Bonds will be issued in denominations of 5, 10, 50 and 100 grams of gold.
  • The last tranche for application was open between 18th – 22nd July, 2016.
  • Gold bonds can be used as additional collateral while borrowing loan from banks.
  • Investors will have to disclose their permanent account number if they invest more than Rs. 50,000. This can generate resistance amongst the investors.
  • People might prefer liquidation of gold and depositing the sale proceeds in bank deposits with an average rate of 8% interest per annum.
  • The bond issued will be of 8 years tenure with an exit option from fifth year.

In summary, it is a good initiative taken by the government and people must contribute by actively participating in the scheme. It is a good opportunity to reduce carrying cost and risk associated with raw gold and unused jewellery.



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