Wednesday, August 31, 2016

#Sovereign #gold bonds make a comeback for Indian investorswith 5th tranche on Sep 1, 2016

What is on offer

Govt.of India announced launching of 5th tranche of #sovereign #gold #bonds,hitting the market, issue opens on 1st September and closing on 9th Sept, 2016. The offer is strictly for Indian residents, institutions, university, charitable institution etc. The gold bonds are priced at Rs. 3150/- per unit, signifying 1 unit is equivalent to 1gm of #gold. One can apply for 1gm and maximum of 500 gms. The tenor of the bonds is 8 years with exit option 5th year option. It also earns interest of 2.75% on the initial capital investment payable semi-annually. The investment amount is protected upto the no of units and the eqivalent amount of the gold prices.

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Why invest in Sovereign gold bonds?

1. It's a paper form of gold, no issues of storage and safety
2. It earns you interest on the capital invested.
3. It can be used as loan collateral (Loan to value ratio to be maintained as guided by RBI)
4. It can be traded on demat format
5. Long term tax exempted on redemption


1. Unlike GOLD ETF, it has moderate liquidity (cannot be sold as easily as GOLD ETF)
2. The premature transfer will attract capital gain tax
3. Only demat format can be traded, paper format will not be available for trading in stock exchanges.
4. Your bonds will be redeemed on maturity, while  in case of GOLD ETF, you can keep it as long as you want.
5.There is no guarantee of capital protection on the amount invested, only the units which will be protected, the redemption amount will be based on the prevailing gold prices.
6. Interest earned will be taxable as per taxation laws in india

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