Sovereign gold bond opens. Four causes to use for this RBI-backed scheme

Sovereign gold bond 2023: The second tranche of the sovereign gold bond 2023 has opened at the moment and it’ll stay open for subscribers until fifteenth September 2023. This means investor can apply for sovereign gold bond scheme until Friday this week. The Reserve Bank of India (RBI) on Friday declared sovereign gold bond worth at ₹5,923 per gm. The central financial institution of India additionally introduced ₹50 per gm low cost for on-line candidates. So, for individuals who apply and pay on-line for sovereign gold bond September 2023 concern, the problem will price ₹5,873 per gm.

Those who apply on this RBI-backed scheme, they get the worth of their gold weight on the time of withdrawal together with 2.50 per cent every year extra earnings. So, if an investor applies for one gm of gold at the moment then she or he must pay ₹5,923 for making use of offline and ₹5,73 for making use of on-line. As sovereign gold bond scheme has eight years tenor, one would get redemption quantity after eight years as pet the one gm gold worth on the time of redemption.

Apply or not?

Giving ‘subscribe’ tag to Sovereign gold bond scheme 2023-24 sequence 2, Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors stated, “Gold prices have been trading slightly subdued after testing record highs of ₹61,845 per 10 grams during the second quarter of 2023. However, as we approach the wedding and festival season in India, gold is likely to attract attention all over again. As outlook for gold is positive in the medium to long term, investors can allocate 10-15% of their portfolios to gold to diversify their risk and protect their wealth against rising price pressures and economic uncertainty.”

On what additional a sovereign gold bond investor will get {that a} regular gold investor will not, Anuj Gupta, Head — Commodity & Currency Research at HDFC Securities stated, “Gold price at the moment on MCX is kind of similar however on the time of redemption, an investor will get a further 2.5% annual curiosity on one’s cash on absolute worth of 1’s funding. So, one ought to apply for this RBI-backed gold funding scheme.”

On whether or not an investor ought to pump cash on this second tranche of sovereign gold bond 2023 tranche, Sugandha listed out the next 4 causes:

1] Central banks all over the world are accumulating gold in big portions amid rising financial uncertainties and a rising push in the direction of de-dollarization. This is seen as a vote of confidence in gold as a protected haven asset.

2] Markets are anticipating that the US central financial institution is close to the tip of its price hike cycle. This is nice information for gold, as increased rates of interest are inclined to weigh on gold costs.

3] Concerns a few weakening international financial system are more likely to maintain gold’s attract as a protected haven funding. Gold is seen as a hedge towards inflation and financial instability.

4] Gold costs have already corrected from their peak of ₹61,845 per 10 gm and have been consolidating across the near-term assist zone of Rs.57,500-58,000 per 10 gm. This could possibly be a possibility for traders so as to add gold to their portfolios in a phased method and sovereign gold bonds are top-of-the-line devices to realize publicity to gold if one has a long-term horizon.

Disclaimer: The views and suggestions made above are these of particular person analysts or broking firms, and never of Mint. We advise traders to verify with licensed consultants earlier than taking any funding selections.

Catch all of the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint.
Download The Mint News App to get Daily Market Updates.

More
Less

Updated: 11 Sep 2023, 11:47 AM IST

Topics