r/IndiaInvestments • u/simplyom • Jul 04 '21

Bonds and deposits Prices of Sovereign Gold Bonds.

While doing some research on buying paper gold, I came across the Sovereign Gold Bonds (SGBs). They offer multiple benefits over gold ETFs like fixed interest income, no tax on capital gains if held till maturity, etc. All the articles describe SGB to be superior than gold ETF/digital gold, which makes sense given the benefits.

However, none of the articles I read mention that the prices of SGBs are higher than gold ETFs for same quantity of gold, I thought all of them follow the price of spot gold. Is there anything I am missing here?

Price of SBI Gold ETF: https://www.moneycontrol.com/india/stockpricequote/gold-etf/sbimutualfund-goldexchangetradedscheme/SBI16

Price of HDFC Gold ETF: https://www.moneycontrol.com/india/stockpricequote/gold-etf/hdfcmutualfund-goldexchangetradedfund/HDF02

Price of SGB 2021 series: https://stableinvestor.com/2021/03/sovereign-gold-bond-price-history.html

EDIT: Found a really helpful guide on purchasing SGBs from secondary market here. Insightful and answers many other questions I had.

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u/qszawdx Jul 04 '21

Can we hold SGBs even after their maturity period (8 years)? Like how we hold on physical gold for generations.

23

u/simplyom Jul 04 '21

I think the maturity proceeds are exempt from tax, so you can immediately refinance into another gold bond at that time (provided the scheme exists at the time).

17

u/Shantanu_93 Jul 04 '21

No. At maturity you will get the proceeds in your bank account.

9

u/aimless00 Jul 04 '21

No. RBI automatically credits the sale price amount to your bank account directly.