Sovereign Gold Bond Scheme 2023-2024 Series II: All you need to know
The Reserve Bank of India (RBI) has announced that the Sovereign Gold Bond Scheme 2023-2024 Series II will open on September 11, 2023. The price of the bond has been fixed at Rs 5,923 per gram of gold. Investors making payment through digital means will get an additional discount of Rs 50 per gram, bringing the effective price down to Rs 5,873 per gram.
The scheme is open to all investors, including individuals, Hindu Undivided Families (HUFs), trusts, and institutions. The minimum investment is one gram of gold and the maximum is 4 kilograms in a fiscal year. The bonds have a tenure of eight years and can be redeemed after the end of the fifth year.
The bonds offer an interest rate of 2.5% per annum, payable half-yearly. The interest is taxable in the hands of the investor. The capital gains, however, are tax-free if the bonds are held till maturity.
SGBs are considered a safe investment option as they are backed by the government. They also offer diversification benefits to investors’ portfolios. However, it is important to note that the bonds are not as liquid as physical gold.
Here are some things to keep in mind before investing in SGBs:
- The price of SGBs is linked to the price of gold. So, if the price of gold goes up, the value of your investment will also go up. And vice versa.
- The interest rate offered on SGBs is lower than the interest rates offered on other investment options such as fixed deposits and savings accounts.
- SGBs are not as liquid as physical gold. It may be difficult to sell your SGBs quickly if you need the money.
Overall, SGBs can be a good investment option for investors who are looking for a safe and secure way to invest in gold. However, it is important to do your research before investing and to understand the risks involved.
Here are some expert views on the gold market:
- Chirag Mehta, Chief Investment Officer, Quantum Mutual Fund, expects gold prices to be rangebound in the near term. He says that the upside is limited in the wake of worries about Fed overtightening, a potential US recession, rising US debt levels, sticky inflation, central bank gold buying and geopolitical tensions.
- Aamir Makda, Commodity & Currency Analyst, Choice Broking, says that the global inflation scenario is likely to remain stagnant, which will pull the gold price higher in upcoming months. He expects the gold prices to touch Rs 64,000-68,500 per 10-gram mark in the next one-two years.
- Parul Maheshwari, a Mumbai-based certified financial planner, says that SGBs are more tax-efficient for long-term investors. She says that capital gains booked in units of gold ETFs and gold funds acquired after April 1, 2023, are taxed as per tax bracket of the investors, making these vehicles tax-inefficient. SGBs, on the other hand, have zero capital gains if held till maturity.
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