Sale of the sovereign gold bonds is at a record high
July has so far been the best month for a sovereign gold bond scheme. It is in terms of the quantity of gold and the amount raised under the sovereign gold bond scheme.
The sovereign gold bond scheme was launched in November 2015 to reduce demand for physical gold and shift a part of domestic savings, used for the purchase of the gold, into financial savings.
The government sold bonds worth Rs 2,004 crore. It indicates that bonds equivalent to gold worth 4.13 tonnes were sold. The data was issued by the government.
Most of the jewelers could not operate in the first three months of this financial year due to pandemic induced lockdown. Hence those who wanted to put money in gold resorted to SGB and gold exchange-traded funds (ETF). In April to June, gold ETFs saw a net inflow of Rs 2000 crore. However, gold bond sales in the first four months of this financial year have been the highest ever financial year sale since bonds were launched.
“SGB has turned out to be the best-digitized instrument to invest in Gold, which has emerged as the best performing asset class. A record number of investors in the new Series of SGBs reflect wide acceptability for digitized investment in gold. Gold has given YoY a return of 41% with the expectation of giving decent returns for the rest of the year. Individuals are investing in SGB,” said Shekhar Bhandari, Senior Executive Vice President, Kotak Mahindra Bank.
Gold sovereign bonds are forms of paper gold and were an easier way to invest in gold without taking physical delivery during the lockdown period. The benefit of buying bonds is that it is a pure investment product. Traditionally, gold investors used to buy jewelry, which later used to get the sentimental attachment and never remained confined to investment. SGB also gets 2.5 percent per annum interest and capital gain exemption if held till maturity. One percent or Rs 50 per gram discount is given to those who buy SGB by net banking.