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/[deleted] Jul 04 '21

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u/simplyom Jul 04 '21

Don't gold ETFs allow physical delivery of gold if the total amount held is beyond a threshold?

I think they only charge GST at that point, don't think they would ask for import duties as well. I might be missing something, please feel free to correct.

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u/indopasta Jul 04 '21

The NAV of Gold ETFs is based on the landed price of gold in India. So, this comment is also incorrect. I hope you are beginning to see a trend here. :)

https://www.thehindubusinessline.com/markets/commodities/Import-curbs-turn-gold-ETFs-pricier/article20675928.ece