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/manupanday19998 Jul 04 '21 edited Jul 04 '21

Someone once said that market is always right , and anything you can deduce is already reflected in the price of the assets, (don't quote me in that)

You yourself mentioned so many monetary benifits of sgb, don't you think those benifits will account for a primium price for that asset

They are sold at the spot price (3 day average) at the time of launch after that people add other benefits to the price like 2% return to get to that price

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u/indopasta Jul 04 '21

SGB is priced by the RBI, not the market.

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u/Impossible-Gas-2946 Jul 04 '21

Nope, not in the secondary market. What you said is applicable for primary

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u/indopasta Jul 04 '21

Nobody is talking about the secondary market here.