well, I am a bit confused, lets start with this.
on 1-10-21
I bought GOLD BEES @40.16 and SGB AUG29V @4700
now GOLD BEES are at 41.3 today and SGB is still below 4700.
and I can see that GOLD BEES are tracking gold price but SGB’s look very bad in tracking gold price.
anyone investing in SGB’S please be careful.
Just curious, how did u conclude that gold bees is right ? Why can’t it be the other way ?
@TradeXMaster
gold bees followed Indian gold price{like mcx gold}, so I am sure gold bees did a pretty good job in tracking.
Goldbees is very liquid and does track the price of gold correctly. The iNAV can be checked here - Exchange Traded Funds, ETF India | NIMETF.com (nipponindiaim.com)
SGB doesn’t track gold price. It’s just like any other equity.
Unlike goldbees, SGB is not very liquid in day to day trade. So daily traded price may not correctly capture gold movement.
SGB is designed as 8 year product. So if you want to invest in gold for long term (at least 5 year or more) than SGB is best suitable product.
If your intent is to capture day to day volatility of gold and frequently trade gold, SGB is NOT the right product.
Hope this helps.
For trading, the best instrument is gold futures.
For short term investments, maybe goldbees.
For longer term investments, SGB is the best option.
All of them have their pros and cons.
SGB tracks the price of gold and is NOT an equity instrument as someone said.
i invested 400 grams of SGB gold - its for my daughter marriage , so i never look that , every 6 month i am geeting 20 k intrest from govt thats cool feature from SGB for short term you can buy gold bees
@TradeB2B @Suyash.K @Akash_Shah
well, I still don’t agree with the points given here that SGB are long term play and will not track gold prices but they are sold as 1gram units of gold.
just imagine as someone commented that he or she has bought 400 units of SGB for daughter marriage and at the time of maturity gold price is 7000/-gram and SGB’S are trading at 6500/-gram.
how can 1gram of gold price be lower than the ETF which is tracking GOLD…
Anything can happen in INDIA…
It doesn’t track properly because of illiquidity. At maturity, you will get the actual gold price because the bonds will be redeemed by RBI.
@hiren_parekh you are confusing between trading prices of SGB and maturity price of SGB
SGB are definitely supposed to track gold, but issue is of daily liquidity. So every day you will not get same price as one gram of gold
This does not really matter, because at maturity you are not going to trade it in market for cash. Instead Govt of India will redeem those bonds at prevalent gold price. So investor need not worry about traded price if he is willing to hold for 8 years.
To give you slightly better example, this is generally the case with all bonds. Consider a scenario where govt issues Gsec bond with face value of 1000 for 10 years (and coupon of say 6%). Now throughout that 10 year, bond price will not remain constant at 1000 while trading.
It might go up or down continuously based on demand, supply and various other factors of economy.
But at end of 10 years, if you are holding that bond govt will pay you back 1000 rs. (regardless of what was its traded price in interim)
SGB is similar bond with face value linked to gold price, so at end of 8 years, govt will pay back based on gold price at that point. However in interim price can vary in trading based on demand and supply.
Hope this helps.
@Akash_Shah
So if current SGB rates are lower than spot gold then it’s a good discount buying…
Well thanks for all the explanation.
Yes, provided you