Gold prices at record high! Investors in Sovereign Gold Bonds (SGBs) are considering selling their holdings as gold prices reached Rs 1 lakh per 10 gm on Monday, showing a 26% increase since January and 33% rise over the past year.
Those who invested in SGBs between May and October 2017, when gold was priced at Rs 2,830 and Rs 2,987 per gram, are now seeing absolute returns of 221% as their bonds approach maturity! Investors from April 2020, who bought at ₹4,639 per gram, could opt for buyback after completing five years, achieving 101% returns, according to an ET report.
Trading options for sovereign gold bonds include selling on stock exchanges or early redemption through the government’s repurchase scheme, available twice yearly after the fifth year. Upon completion of eight years, bonds are redeemed with accumulated capital returned to investors.
Financial experts recommend maintaining gold holdings at 10-15% of investment portfolios, as it serves as protection against inflation and provides stability during international conflicts.
Also Read | Donald Trump tariffs to hit global economy hard! IMF cuts India’s GDP growth forecast to 6.2% for 2025; says it’s relatively more stable
“Sovereign gold bond is the best way to hold gold, as you get an additional 2.5% interest every year, there is a ₹50 discount on digital purchase while buying, there is no storage cost or expense ratio, and capital gains are tax free on maturity,” said Nikhil Gupta, founder, Sage Capital.
Due to the cessation of new sovereign gold bond issuances by the government, Gupta advises investors with 10-15% gold allocation in their total portfolio to retain these bonds until maturity to maximise their advantages.
For those holding a substantial portion of their investments in sovereign gold bonds, Gupta suggests avoiding further gold investments. Upon maturity of these bonds, he recommends utilising the returns for additional investments in debt and equity instruments.
Also Read | India in a good spot, China in big trouble: Mark Mobius warns market likely to get even shakier on Trump’s tariff moves
