And here we have the Sovereign Gold Bond Scheme too . . . . . . .
As we all know Bond means fixed return and be used as tax saving tool. Sovereign Gold Bond Scheme is introduced by our NSE people are not making use of it, more than it is not reaching the retail investor, usually peoples need to invest regularly in such bonds regularly. Interest on Bonds will be Taxable Under IT Act, 1961. The bonds will be exempt from wealth Tax under the Wealth Tax Act. 1957.
The Government of India will be launched the Sovereign Gold Bonds . As investors will get returns that are linked to gold price, the scheme is expected to offer the same benefits as physical gold. They can be used as collateral for loans and can be sold or traded on stock exchanges.
BENEFITS
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The Sovereign Gold Bonds will be available both in demat and paper form.
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The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
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They will carry sovereign guarantee both on the capital invested and the interest.
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Bonds can be used as collateral for loans.
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Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
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Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
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Capital gain tax arising on redemption of SGB to an individual has been exempted. The indexation benefit will be provided to LTCG arising to any person on transfer of bonds. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.
HOW CAN I BUY IT?
Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 1 grams. The bonds can be bought by Indian residents or entities and is capped at500 grams.
WHERE CAN I BUY IT?
Investors can apply for the bonds through scheduled commercial banks and designated post offices. NBFCs, National Saving Certificate (NSC) agents and others, can act as agents. They would be authorised to collect the application form and submit in banks and post offices.
BSE and NSE are included as receiving offices, apart from the commercial banks, SHCIL, designated post offices
WHO IS ISSUING THE BONDS?
The Bonds are issued by the Reserve Bank of India on behalf of the Government of India. The bonds are distributed through banks and designated post offices. This should make subscribing to the bonds an easy affair. During redemption, "the price of gold may be taken from the reference rate, as decided, and the Rupee equivalent amount may be converted at the RBI Reference rate on
Original source from http://finmin.nic.in/swarnabharat/sovereign-gold-bond.html
In Gold We Trust is justified for Indians. There is a common perception that gold never fails. It is believed that the value of gold always increases with the general prices. Thus, most of the Indians consider gold as the safest investment.
And here we have the Sovereign Gold Bond Scheme is available for investment at Zerodha .
Sovereign Gold bond is an investment in Gold, but it does not involve the physical gold. Like physical gold, the value of your investment increases with the rise in gold prices. You don’t need to visit a jeweler or bullion market to sell the gold bond. The gold bond gives you the benefit of gold investment, but you never own the physical gold. You own a bond paper, that also can be in the digital form.
Should You Invest In Gold Bond
Are you one of them, who consider the gold as a necessary investment? Are you planning to invest in gold bars or gold coins? Do you buy gold for pure investment purpose?
The gold bond is made for you. It has all the qualities of gold investment except shine of gold. You will get the same return plus interest with peace of mind. It is a far better investment than the bullion. You can hold Gold Bond in Demat Account.
If you want to invest gold Bond throgh Zerodha, visit https://zerodha.com/gold/ , login with Kite credential & you place order to buy gold bond.
Issue price to be announced 18th July 2016.*
All orders will be placed on NSE after debiting trading account on 22nd July. Ensure to maintain sufficient balance.
If you had placed an order before, it will be replaced with your new order.
Bonds shall be issued on 5th Aug 2016.
Benefit of Gold Bond to Customer
Are You also one of them who trust the gold more than any other investment? Do you also want to put some money into the gold for investment purpose?
You must consider gold bond instead of physical gold. You will get similar but better return than the physical gold.
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The value of your investment in the gold bond would increase with the increase in gold prices.
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The gold bond gives a better return than the physical gold as It gives interest as well.
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You need not to worry about the safekeeping as a gold bond can be kept in digital form.
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You will save the expense of locker as a gold bond can be kept in your Demat account.
Features of Gold Bond
The gold bond is neither an investment in physical gold nor it is like any other financial bond. It is a fusion product to give you the benefit of both the world.
Interest Rate
The interest rate of gold bond is fixed at 2.75%.
.Tenure
The value of the gold bond is subject to the volatility of the gold. The gold bond can give negative return if gold prices go down. To mitigate this volatility, the government is issuing the long term gold bond. The tenure of the gold bond is 8 years. But you have the option to exit after 5 years.
Tax on Gold Bond
The tax on the the gold bond is levied similar to the physical gold and gold ETF. There is no concession yet. The current tax rate of the gold bond is given below.
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Sold Before 3 years – Short term capital gain tax – The gain is added into the total taxable income. The tax can be 0-30%.
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Sold After 3 years – Long term capital gain tax – 20%.
However, the government is considering to exempt the maturity proceeds of the gold bond from the financial year 2016-17. There would not be any wealth tax.
Form of Gold Bond
The gold bond does not give the visual pleasure of physical gold. But If you wish, you can have the gold bond in the paper format. Otherwise, the gold bond is also available in Demat form. You can keep it into your Demat account. You don’t need to keep and protect it. The redemption of Demat gold bond is also very easy.
Gold Bond To NRI
The sovereign gold bond scheme is only for the resident Indian. The non-resident Indian (NRI) can’t buy the gold bond.
The sovereign gold bond scheme (SGBS) is the best method of gold investment Undoubtedly.
To know more about sovereign gold bonds you can visit NSE FAQ https://www.nseindia.com/products/content/equities/sgbs/FAQ.pdf
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Hi,
investor can apply for the bonds through scheduled commercial banks and designated post offices. NBFCs, National Saving Certificate (NSC) agents and others, can act as agents. They would be authorised to collect the application form and submit in banks and post offices.
BSE and NSE are included as receiving offices, apart from the commercial banks, SHCIL, designated post offices.
New Delhi, July 14 (IANS) The government on Thursday announced that the fourth tranche of its sovereign gold bond scheme will open on July 18.
“Applications for the bond will be accepted from July 18, 2016 to July 22, 2016. The bonds will be issued on August 5, 2016,” a Finance Ministry statement said.
Finance Minister Arun Jaitley had in last year’s Union Budget announced developing the Sovereign Gold Bond, as a measure to contain demand for the metal in physical form. In Budget 2016-17 he has proposed that redemption of sovereign gold bonds by an individual be exempt from capital gains tax.
The bonds will be sold through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices and recognized stock exchanges,
1 Like
Talk about Gold, Indian heart yearn for it. We Indians shower unconditional love for this unusual yellow metal that has been ruling mankind for centuries.
Be It marriage, holy ceremonies , festivals , good day or a bad day, it still remains one of our favorites among us for wealth creation.
Being a novice Investor and a gold lover with a love to accumulate gold to create my wealth , To do so I would have to buy gold from a gold smith.
Say I do not want to buy gold in physical form.
What are the options available for me?
And yes! here we go we have a Gold in another version 'Sovereign Gold Bond Scheme' from RBI and guaranteed by Government of India.
This is a great opportunity for an Investor like me who like to invest in gold and want to invest in them in an immaterial way.
Investments can be made in a simple and elegant way by buying these bonds through Post offices,Banks( Material form) and through online brokers like Zerodha (Demat Form)
I will be eligible to buy these bonds in the value of 24 caret gold with a minimum investment of 2 grams and a maximum of 500 grams for a retail investor with a lockin period of 8 years @ an annual return of 2.75 % with a minimum risk.
Investments are hassle free and I can redeem my entire investments at my maturity in the price of Gold with the prevailing market price + 2.75% annual return with a benefit of Capital tax gains on my entire return.
It has the flexibility to pledge for a Loan as regular gold does , no transaction charges involved. No headache of maintaining a locker in a bank to put my gold and save it against various risks.
say I want to pull out my investment and there is a provision and I exit from my 5'th year of my investment.
So people who love gold and the glitter that brings on our face when we think about it. Start investing in 'Sovereign Gold Bond Scheme' backed by RBI and guaranteed by Government Of India.
Happy buying the yellow metal and my your investments Glitter :-)
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GOLD !!!! Worshipped by Many!
According to me there is no human being who doesn't love gold. Gold has a long history and it used to be a mode of currency and Since then no one dreams of loosing Currency. Compared to other countries Indian's show some extra love towards GOLD and some also worship them. As people now have become really smart they expect returns out of every investment they make. People say gold is investment product. I would say it is not a safer investment product as it doesn't yield interest and to safeguard the gold, one has to spend good amount on locker's and other stuff's. So why dont we turn for a a alternative which also makes sure we have a gold and also make sure it gives us a return.
There is a common perception that gold never fails. It is believed that the value of gold always increases with the general prices. Thus, most of the Indians consider gold as the safest investment. India is the second largest consumer of GOLD after China. You can imagine how much gold should be lying in everyone's house without earning any return. Yes, this s what Indian Government thinks and that's when a Idea of Sovereign Gold bond Idea was started.
Sovereign Gold bond is an investment in Gold, but it does not involve the physical gold. Like physical gold, the value of your investment increases with the rise in gold prices. You don’t need to visit a jeweler or bullion market to sell the gold bond. The gold bond gives you the benefit of gold investment, but you never own the physical gold. You own a bond paper, that also can be in the digital form.
Benefit of Gold Bond to Customer
Are You also one of them who trust the gold more than any other investment? Do you also want to put some money into the gold for investment purpose?
You must consider gold bond instead of physical gold. You will get similar but better return than the physical gold.
- The value of your investment in the gold bond would increase with the increase in gold prices.
- The gold bond gives a better return than the physical gold as It gives interest as well.
- You need not to worry about the safekeeping as a gold bond can be kept in digital form.
- You will save the expense of locker as a gold bond can be kept in your house or Demat account.
- There is no chance of cheating or impurities in the gold bond. You would always get 100% pure gold bond, which will give you 100% value, always.
Interest Rate
The interest is most attractive part of the gold bond. The interest rate of the gold bond is fixed at 2.75%. Do you find it very low? Think again.
The interest on the gold bond is over and above the appreciation in the value of gold. Till now you are not getting even 1% interest on gold. Do you get interest for possessing gold coin, bar or jewelry? No, only the value of gold increases with time. Gold does not give any interest.
Any investment can give you profit in two ways. The first is the regular income because of the use and second is the increase in the value.
Take the example of a farmland. It gives you a regular income in the form of crop and value of farmland also increases with rising prices of land.
A house also gives the rent and increased value of the property.
A Share gives dividend as well as increased value.
Unlike these investments, the physical gold does not give any regular income. You benefit only because of the price rise. If there is no price rise, you will not earn anything.
Hence, the interest earned by a gold bond is an added benefit over the physical gold. Of course, the interest rate is not very high because gold hasn’t any productive use. But something is better than nothing.
The gold bond does not give interest as high as the fixed deposit. But it is enough to reward the investor who overcomes the lust of physical gold. The gold monetization scheme also gives a similar return.
The interest rate on gold bond is fixed at 2.75%. The calculation of interest is done on the value of gold at the time of the investment.
Comparison of Sovereign Gold Bond
Gold Bond Vs Gold ETF
Gold ETF is also a way to invest in gold. In this method of investment also, you don’t get the physical gold in your hand. But, the mutual fund company buys gold for you. The fund company itself keeps the gold. If you require, you can also get the gold in lieu of gold ETF. Otherwise, you can sell the gold ETF and get back the money.
Similar to the gold bond Gold ETF also tracks the gold price. You buy the gold ETF at market price and sell it at market price. These are the some differences of gold ETF.
- Gold ETF is a mutual fund traded in the stock market. The price of gold ETF changes similar to the price of the stock market.
- You require a Demat account to own gold ETF. Gold bond does not mandate the Demat account.
- The fund houses charge 1% expense annually from the gold ETF. The gold bond does not charge any expense.
- The gold ETF does not give any interest. You gain because of price rise if any. The gold bond gives nominal interest.
- It can be sold at the live price of gold ETF. The price of a gold bond is set on the basis of last some days movement.
- A small quantity of 1 gram gold can be bought through the gold ETF. Minimum 5 gm gold bond is necessary.
Gold bond is more beneficial than the gold ETF as it does not have any expense charge and gives interest as well.
Gold Bond Vs Gold Fund
- The gold fund invests in the several gold ETFs. That is why it is similar to the gold ETF. The return is also similar to the gold ETF or Physical gold. Like a gold bond, the gold fund also does not require Demat account.
- Gold fund is managed by the fund manager, therefore it has a greater expense. Almost 1.5% expense is charged from the gold fund annually. Because of this expense, the capital gain from the gold fund is less than the gold bond.
- The gold fund also doesn’t give any interest.
- Gold fund is always available to purchase. You can buy or sell it anytime. While gold bond has the issue period and maturity date. The gold bond can be also bought from the secondary market.
Gold fund is not advisable as it charges fund management fees while fund manager has very little work to do. Direct investment in gold ETF is better than the gold fund.
Gold Bond Vs Physical Gold
- Gold bond is an alternative of physical gold investment. The price of a gold bond is itself dependent on the price of physical gold.
- Unlike a gold bond, investment in physical gold requires import of gold from other countries. Gold bond does not require any import.
- You have to keep gold at a safe location. there may be annual locker expense.There is no such need for the gold bond.
- The purity of gold can be suspect. You need to be very careful. There is no such requirement with the gold bond.
- Physical gold does not give any interest. You benefit only from the price rise.Gold bond gives both types of benefit.
Should You Invest In Gold Bond ??
Are you one of them, who consider the gold as a necessary investment? Are you planning to invest in gold bars or gold coins? Do you buy gold for pure investment purpose?
The gold bond is made for you. It has all the qualities of gold investment except shine of gold. You will get the same return plus interest with peace of mind. It is a far better investment than the bullion. You can buy gold bond from SBI, post office or any other bank.
But if you want the gold ornaments to keep it with you. If the shine of gold motivates you, the gold bond is not for you.!!!
Gold ETF and Gold fund also give you peace of mind, but it charges expense and does not give any interest. Also, the gold bond is backed by the government of India, therefore, it is more secure.
Eligible to invest in the bonds
Any person who is a resident in India is eligible to invest in the bond. Besides individuals, HUFs, trusts, universities, and charitable institutions are also eligible to invest. Joint holding of the bond is allowed and minors can also hold the bond provided the application is made by the guardian of the minor.
You can refer RBI website for the FAQ's
www.rbi.org.in/Scripts/FAQView.aspx?Id=109
"Gold is a great thing to sew into your garments if you're a Jewish family in Vienna in 1939, but I think civilized people don't buy gold, they invest in productive investment product". - Charlie Munger
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Gold is one of the precious metal, It is as precious as time. We compare phases as golden time or golden age etc. Gold trading has a long history. Discovered in ancient times, gold has been a sign of wealth and social position in many societies since it was first used as currency. Today gold is still an important material of trade and business.
Gold coins as medium of exchange was since from ancient times of India. They circulated as currency in many countries before the introduction of paper money. Once paper money was introduced, currencies still maintained an explicit link to gold (the paper being exchangeable for gold on demand).
Sir Isaac Newton compared the value of gold to silver in his system of measurement. Some people think that this was when the gold standard was first set.
Countries value gold as a measure of wealth and a base of exchange. Individuals value gold as insurance because paper money is not always certain. Gold continues to have effects on world financial markets today and will into the future.
In India People buy gold for a variety of reasons such as for its auspicious sentiment; as an investment (Gold continues to command long term value, a tag for being a safe haven); hedge against inflation; asset allocation, etc. Gold also carries a high perceived value and a high emotional quotient. It reinforces closeness of relationships. Gold coins in smaller denominations are also considered apt for corporate gifting and rewards for contests or for commemorative giveaways.
Many people think that Indians are gold crazy.
Though this statement cannot be completely negative, the truth is that Gold has always had a special significance for all ages. The old adage - all that glitters is not gold, also in a way underlines the importance accorded to Gold. Gold lends itself as a commemorative medium to various engagements like golden anniversaries, golden jubilee, gold medals, gold credit card etc. In India people buy gold anytime and not only during special occasions like weddings, festivals or special events. Gold is also offered to Indian deities
Few reasons why Indians like gold:
- Gold is considered an equivalent for liquid cash: Gold is highly liquid and portable as a Security or Asset. It can be converted to cash anytime when an emergency arises and is considered a friend in need.
- Gold is considered as a Status Symbol: Especially in India gold symbolizes wealth. In Indian weddings the Gold brought by the bride shows her family's status and wealth. It is believed that a bride wearing 24k gold on their wedding to bring luck and happiness throughout the married life.
- Gold is a very good investment: Gold is an asset which has consistently increased in value and thereby considered as a safe and secure investment. In the last five years Gold has delivered over 20% YOY return. It is considered an effective diversifier which helps to reduce portfolio risk.
- Gold is considered as gift item: It's precious and worthy across all cultures and times. The gold jewelry is given as gifts during weddings, festivals and other special occasions.
- Gold has great religious significance: Gold is the symbol of the Hindu Goddess Lakshmi and considered highly auspicious. Gold is brought or presented on festivals like Dhanteras and Akshaya Tritiya. Toe rings are never made of gold as it represents the goddess of wealth and should not be soiled by touching a human's feet.
- Great Ornamental Value: Who can resist gold ornaments? Women of every age and time have always loved wearing gold ornaments. Moreover, Gold ornaments are never out of fashion. It also may be remembered that wedding rings are also traditionally made of gold to mark a long lasting relationship.
- Great value as Heirloom: Gold jewelry is something which can be passed down from one generation to the other as ancestral property. This is why people say Gold is forever! Planning for gold investment for your children’s marriage well in advance can be a very effective strategy since it will save valuable time and money during the marriage in future. Given that gold prices always tend to grow, slow, steady, and planned accumulation of gold for your children’s marriage will stand you in good stead.
Impact of Gold Imports on Indian economy:
Oil and Gold are top imports on this list. One can say that, Oil can be stated as necessity of the Indian economy. Gold on other hand has no such importance. It’s just Indian mentality that Gold investment is good as it gives higher returns and is less risky.
An increase in Current Account Deficit: As we know, gold bullion and raw form is used for minting currency. The more country purchases gold, the more the reserves dry up leaving the metal scarce in government's treasury. This needs to be noted from the fact that any slump/hike in sensex is accompanied sooner or later by change in price of gold.
Drain foreign reserve: This is interlinked with the CAD mentioned in point 1. Much like crude oil, rightly called black gold, a country has to dish out money in USD to procure the commodity.
The current account deficit CAD is a measure of the value of goods and services a country imports exceeding the value of goods and services it exports. The sharp decline in global crude oil prices has come as a boon for the government and has enabled it to slash its fuel subsidy bill significantly and boosted finances at a time when the economy is passing through a sluggish phase. Both oil and gold have enabled the government to show a better fiscal picture.
India had imported 199 tons of gold in the first six months of 2016, which is a 50.49% drop compared with 402 tons imported in the corresponding period last year.
Sovereign Gold Bond Scheme
Since then, the government has taken a series of steps to mobilize gold and keep the CAD within manageable limits.
The Bonds are issued by the Reserve Bank of India on behalf of the Government of India.
Sovereign gold bonds (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold where the issue and redemption is carried out in cash but indexed to the value of the underlying gold. The bond is issued by the Reserve Bank on behalf of the Government of India.
The gold monetization scheme aims to mobilize around 20,000 tons of idle gold lying in the country by encouraging institutions and individuals to deposit it with the government for interest. Finance Ministry data shows that 1,467 kg of gold has been deposited by just 86 depositors since the launch of the monetization scheme.
As investors will get returns that are linked to gold price, the scheme is expected to offer the same benefits as physical gold. They can be used as collateral for loans and can be sold or traded on stock exchanges.
BENEFITS
- The Sovereign Gold Bonds will be available both in demat and paper form.
- The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
- They will carry sovereign guarantee both on the capital invested and the interest.
- Bonds can be used as collateral for loans.
- Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
- Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
- Capital gain tax arising on redemption of SGB to an individual has been exempted. The indexation benefit will be provided to LTCG arising to any person on transfer of bonds. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.
HOW CAN I BUY IT?
Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 1 grams. The bonds can be bought by Indian residents or entities and is capped at 500 grams.
So, all that doesn't glitters is also gold.
References :
http://tradingqna.com/42522/should-i-invest-into-sovereign-gold-bonds?show=42522#q42522
http://finmin.nic.in/swarnabharat/sovereign-gold-bond.html
https://www.nseindia.com/products/content/equities/sgbs/sgbs.htm
https://www.youtube.com/watch?v=vXghYXPE32c
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Gone are the days when you actually had to physically acquire the traded gold on the expiry of the contract. Gold, India’s tremendously popular commodity with a spectacular economic history, has been upgraded for good. With the advent of Sovereign Gold Bonds, you can invest without having physical forms of Gold in your ultra-secure lockers. Nothing could please you more than literally earning a 2.75% annual interest on Gold which is not even physically held by you. Infact, you have it in the dematerialized form. Like cherry on top, with the interest earning similar to a “traditional Fixed Deposits”, you anyways, earn a penny on each point of appreciation. If you ask me, from the time i have known Indian Stock Markets, the Sovereign Gold Bonds are supposed to bring in a Sea-change in the perception of investors in Commodities.
Since childhood, i have seen my parents buying the physical gold and sulking about the making charges and taxes that they had to pay which would not be recovered in any possible way when they try to sell it. Well, Sovereign Gold Bonds appear to be the answer to all their prayers. Essentially making charges have been bade Adieu. Capital gains tax are also exempted when you file your income tax returns. I’d say the market is getting Investor-friendly and the opportunities for investors are rising day by day. After all making money is the ultimate desire of any investor with the least possible opportunity cost.
So there it goes guys, Smart Investing, Healthy Earning!
In Gold We Trust
Gold is back! With the strongest quarterly performance in 30 years, the precious metal in Q1 2016 emerged from the bear market that had been in force since 2013. A decisive factor in this comeback is growing uncertainty over the recovery of the post-Lehman economy.
Gold prices up by 25% in 2016, gold has been the biggest outperformer among all asset classes this year, gold funds in India have seen outflows.
The status of gold as a safe haven has yet again proven its worth. Gold, because it is familiar, has been investors' first choice in building their monetary portfolios.
Amid the global crisis of confidence, investors seem to be re-discovering the fact that gold has
been used as money for thousands of years.
Gold is an excellent measure of the quality of paper money. It contains no liquidity risk, and it is
globally accepted and traded around the clock. There is also no credit risk associated with gold,
and gold cannot turn worthless.
Sovereign gold bond scheme in India
WHAT IS THE SOVEREIGN GOLD BOND?
The Government of India will be launching the Sovereign Gold Bonds Scheme soon. As investors will get returns that are linked to gold price, the scheme is expected to offer the same benefits as physical gold. They can be used as collateral for loans and can be sold or traded on stock exchanges.
HOW CAN I BUY IT?
Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 1 grams. The bonds can be bought by Indian residents or entities and is capped at 500 grams.
BENEFITS
The Sovereign Gold Bonds will be available both in demat and paper form.
The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
They will carry sovereign guarantee both on the capital invested and the interest.
Bonds can be used as collateral for loans.
Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
Capital gain tax arising on redemption of SGB to an individual has been exempted. The indexation benefit will be provided to LTCG arising to any person on transfer of bonds. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.
At Zerodha we can buy Gold bonds at
https://zerodha.com/gold/
Gold is the most popular as an investment among all the metals. Investors generally buy gold as a way of diversifying risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility as are other markets.
Investing money in gold is worth because it is a hedge against inflation. In the short run, however, gold is a very strong bet compared to shares that are highly volatile. The idea for gold investment will be to use it at times when the markets are falling and when the inflation is very high.
Gold scores the highest in terms of liquidity, compared to all other investments.You can invest in gold by buying Jewellery, in the form of Gold ETF, Gold coins and bars, Equity based gold fund or the mutual fund and the Gold bonds.
E-GOLD:
Last year, in March, the National Spot Exchange Limited (NSEL) introduced the e-series products for commodities, including e-Gold. This scheme enables you to buy gold and hold it in a demat account, which can later be converted into physical gold. This means that you can invest in small chunks to accumulate a sizable investment.
Sovereign Gold Bonds Scheme
The Government of India will be launching the Sovereign Gold Bonds Scheme soon. Where you will get returns as per the gold price available in the market, it is expected to offer the same benefits as physical gold and you will hold it in the demat form. It can also be used as collateral for loans and can be sold or traded on stock exchanges.
Now we can convert our physical gold in gold bonds, and government gives an interest of 2.75% annually. It is a guaranteed interest on gold over and above any appreciation of gold prices that happen on the market. Gold's market returns + Fixed 2.75% per year on invested amount. Guaranteed by Government of India*.
Now this is possible with Zerodha If you are a Zerodha client, you can visit here:
https://zerodha.com/gold/ to apply. The money will be debited from your trading account 1 or 2 days before close of the issue. You can visit the same link to edit/delete as well.
The issue dates are still not announced. Should be between 2nd and 3rd week of July. So this is similar to a stock IPO.
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People have long had a fascination for the yellow metal. Gold has moved entire societies into action and inspired works of art and terrible violence in equal measure. And now, Gold is back!
Last week, the 2016 edition of the 'In gold we trust' was released. And what I have learned from this publication is summarized below:
- The main idea of the report is that the shiny metal emerged from the bear market in the first quarter of 2016, marking the strongest quarterly performance in 30 years. The main reasons for its excellent performance were the growing uncertainty over the recovery of the post-Lehman economy, and negative interest rates.
- What I like in this report is that authors properly understand the nature of gold as a monetary metal which mirrors the state of the global economy and monetary architecture. Thus, the factors which influence the price of gold are not supply and demand statistics, but:
- The trend in inflation and inflation expectations.
- The level and trend of real interest rates.
- The trend of the U.S. dollar and other fiat currencies.
- The trend of commodity prices.
- Credit spreads (as an indicator of economic confidence and credit growth).
- The trend and momentum of money supply growth.
- Opportunity costs (returns offered by stocks, bonds, etc.).
- Confidence in central bank policy, the stability of the financial system and economic developments.
- Confidence in the political system and fiscal stability.
- The demand for money and the propensity to save.
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According to the report, the main reasons for being bullish with regard to gold are:
- The ultra low interest rates and the bubble in bonds – when it bursts, gold will surge.
- The possibility of adopting even more expansive monetary policies, like helicopter money, which could lead to inflation, and a loss of confidence in the central banks and paper currencies.
- The potential for disappointment that could result from a further delay in the normalization process is high. In particular, the recent Brexit vote may be the excuse the Fed needs to postpone its rate hikes.
- The current economic expansion is old, weak, artificial and not satisfactory in the eyes of the broad population – therefore, a new recession is inevitable, while stagflation is highly possible.
- The full-fledged inflation trend is underway.
Conclusion: To sum up, the last edition of the In Gold We Trust report is a very lengthy, but interesting publication! :)
P.S. Our PM Modiji is also in full swing to make people trust in gold. Here's the link of the official website- http://finmin.nic.in/swarnabharat/sovereign-gold-bond.html
P.S. What's safer that gold in demat form? Zerodha has introduced the same. More details here- https://zerodha.com/gold/
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An Indian man who bought one of the world's most expensive shirts made entirely of gold has been allegedly battered to death. Datta Phuge was a money lender.
Wish if he knew about Sovereign Gold Bond Scheme.
Its happens only in India.
India’s love for gold is like a ocean ….you can’t measure depth. It’s like falling in love over and over again. It’s timeless..
It’s a world known fact that almost every Indian citizen has physical gold stored with them. It’s considered as a symbol of wealth and status.
We strongly believe even though gold prices fall still over a period of time it will rise and give us return. This trust that we have on storing physical may not have much impact on us as individual but as aggregate India has to pay big prize.It impact imports, balance of payment and GDP growth.Gold also diverts half of savings out of the formal financial system, where they can be harnessed for investment.
So here Government of India has come up with Sovereign Gold bond scheme.In order to reduce the demand of physical gold and to push investments in India.
So many of us hesitates about investment in any new scheme but this one is going to be truly fruitful.
Sovereign Gold bond is not financial bond or physical gold but a fusion of both investment. They work like substitute to a investment made in physical gold.
The value of your investment increases with the rise in gold prices. You don’t need to visit a jeweler to sell the gold bond. The gold bond gives you the benefit of gold investment, but you never own the physical gold. You own a bond paper, that also can be in the digital form.
The interest rate of the gold bond is fixed at 2.75%. Unlike these investments, the physical gold does not give any regular income. You benefit only because of the price rise. If there is no price rise, you will not earn anything. But in Sovereign Gold bond you earn interest , as you would agree something is better than nothing.
Some of the Keys facts and benefits of Sovereign Gold bond is mentioned below :-
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Safest way to buy and store gold, since it is 'Digital Gold', no lockers required to store it.
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Earn 2.75% assured interest per annum on the investment
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Asset appreciation opportunity plus assured interest
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Issued by Government of India. Tradable on Stock Exchange
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No TDS applicable
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Can be used as collateral for Loans
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Enjoy the ease of investing through NetBanking.
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Indexation benefit if bond is transferred before maturity
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No Capital Gains Tax on redemption
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Only Resident Indian entities including Individuals, HUFs, Trusts, Universities, and Charitable institutions can buy these Bonds.
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Interest will be credited semi-annually in the investor’s account
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Minimum subscription is 2 Grams and maximum investment is 500 Grams per investor per annum
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It is mandatory for investors to provide bank account details to facilitate payment of interest /maturity value
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Redemption after 8 years from date of issue with a lock in of 5 years.
So go ahead and invest to enjoy returns of the Sovereign Gold bond .
Increasing stock market volatility (serious swings in stock prices) seems to be sending investors to gold. The precious metal has risen quite a bit since the start of the year - and the high level of trading activity indicates that it could climb even higher.
Gold?
People have long had a fascination for the yellow metal. Gold has moved entire societies into action and inspired works of art and terrible violence in equal measure. Gold has many uses: as currency, jewelry and even for industrial purposes.
Gold was used as a currency as early as the 1st century B.C. It has certain properties that make it particularly attractive as a currency - it can be easily melted down, molded and shaped. We've actually used gold as a currency for so long that it was only after World War II that gold-backed currencies were replaced with fiat currencies! FYI: Fiat money is currency that is backed only by the trust of the people in the government.
But why are investors putting their money into gold?
Think about the current market environment right now. Stock markets worldwide have seen large dips, even recessions in some parts of the globe. There's a lot of fear and anxiety about where the market is headed. People are paying very close attention to the U.S. Fed and what their role in this whole thing is going to be. U.S. government bonds, considered a super safe investment, have seen their yields (or return) go down. That means that people are putting more of their money into bonds. (Think: when yields go down, it means prices are increasing. If prices are increasing, it's because people are buying and demanding more of that good).
Gold investments are a good hedge against inflation. Think about it: if you think inflation is going to rise, eating away your returns in equities, then you might be interested in allocating some of your cash to gold. Likewise, if the dollar is very strong (as it is now), you may imagine that it has nowhere to go but down, then you might see gold as a good investment. When the value of a dollar goes down, gold tends to go up..
Introducing the Sovereign Gold Bond Scheme
Government of India has launched a Sovereign Gold Bond scheme Issued by the Reserve Bank of India (RBI), the scheme will be a great investment vehicle for all those who like to invest in gold without owning physical gold.
Those who invest in the scheme can avail of the following benefits:-
1.Available to all resident individuals, HUFs, trusts, universities and charitable institutions
2.Period of the Bond: 8 years (Exit option from 5th year)
3.Minimum permissible investment: 2 units (2 grams of gold)
4.Maximum permissible investment: 500 grams of gold per financial year
5.Interest rate is fixed at 2.75% per annum, payable semi-annually on the initial value of the investment
6.Bonds can be used as collateral for loans
7.Assured market value of gold on the day of maturity
8.Bonds are tradable in the stock exchanges.
9.Can be given as gifts
10.Part holdings can be redeemed
11.Nomination facility available
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"We Love a Bit of GOLD"
I would like to start this with a small incident that happened with me,I was madly in love with a girl and one day i made up my mind to tell my mom that i want to marry that girl,So i went to my mom and said i am in love with someone and i want to marry her,I don't know it was a joke or my mom was serious about it, The first question she asked me was "How many grams of gold can her dad offer you as Dowry?"
I was little surprised with this question and my answer to my mom was her dad own's a gold palace.
Then.....?
Trust me my mom and my wife are the best female friends i have ever seen in my life after that ;)
It reminds me a quote from Geoffrey Chaucer,
“If gold rusts, what then can iron do?”
People say that there is “Nothing More Mellow then Gold”
Since the time immemorial, gold has fascinated Indians. Indians love gold for its investment value
considering the inherent store value and for being a great hedge against inflation/currency
depreciation, its cultural significance, and its symbolic value in terms of its demonstrative effect in
the society. The fact that Indians own more than 22,000 tones of Gold, shows their love for the
yellow metal.
We Indians live in a Society where the Success of any given Individual is measured either by the Size
of his Cash Deposits or his Gold Reserve. Men are fascinated to Women but what are Women
fascinated to? Love? It’s the Yellow Mellow that they there more fascinated to and then comes the
fascination of their better half. So to all the Men out there, Next time when you want to Punch
through the Heart of Lady, Gift her Metal because “When you get a bee in your bonnet it tends to
attract the honey”
Here strikes a fact read some time back, “Our bodies contain about 0.2 milligrams of gold, most of it
in our blood”.
Let’s relate how Gold is Significant for “We Economic Drives”!!!
The current economic difficulties have left most investors with a deep-seeded feeling of insecurity.
And with good reason too…
With the US dollar index plummeting around 25% since 2000, the need for secure investment
opportunities is at an all-time high. In fact, even today the average lifespan for paper currency is
only 39 years.
As Voltaire famously said, “Paper money eventually returns to its intrinsic value – Zero.”
With the death of modern fiat currency quickly approaching, there’s never been a more important
time for you to hold the one resource that has existed as a stable store of value for generations –
gold.
Put simply, investing in gold and other precious metals is one of the best ways to protect you from
currency debasement. Many financial analysts identify it as the most sensible option in the current
economic situation and believe that precious metal bullion prices will only rise in the future.
People buy gold for a variety of reasons such as for its auspicious sentiment; as an investment (Gold
continues to command long term value, a tag for being a safe haven); hedge against inflation; asset
allocation, etc. Gold also carries a high perceived value and a high emotional quotient. It reinforces
closeness of relationships.
How Gold as an investment is? Gold is an asset which has consistently increased in value and thereby considered as a safe and secure investment. In the last five years Gold has delivered over 20% YOY return. Over the past 15 years, the price of gold has increased by 315%, roughly the same as the 30-year return.It is considered an effective diversifier which helps to reduce portfolio risk.
The Government of India as recently launched Sovereign Gold Bonds Scheme. As investors will get returns that are linked to gold price, the scheme also offers an interest of 2.75% annually additional to whatever appreciation happens on the underlying gold value and the same benefits as physical gold. They can be used as collateral for loans and can be sold or traded on stock exchanges.
I Appeal, Gold coins in smaller denominations are also considered apt for corporate gifting and rewards for contests or for commemorative giveaways, Hope I will get one after this Blog ;)
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Overview of Sovereign Gold bonds
- Backed by-Government of India
- Minimum Investment- 2 grams
- Maximum Investment- 500 grams
- Maturity period- 8 years
- Interest rate- 2.75 per cent (fixed rate) per annum
- Premature redemption period- After initial 5 years
- Tax implications- Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). Capital gains tax treatment will be the same as that for physical gold.
- Best platform to buy-https://zerodha.com/gold/
Sovereign Gold bonds will be issued by Indian government through RBI. They will have sovereign guarantee. The issue price will be in Indian Rupees on the basis of the previous week’s (Monday – Friday) simple average price for gold of 999 purity published by the India Bullion and Jewellers’ Association Ltd. (IBJA). The issue price will be disseminated by the Reserve Bank of India. The price of gold for the relevant tranche will be published on RBI website two days before the issue opens. The Bonds bear interest at the rate of 2.75 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
These Bonds will be sold through scheduled commercial banks (excluding RRBs), SHCIL offices and designated Post Offices either directly or through their agents.
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc.
If the customer meets the eligibility criteria, produces a valid identification document and remits the application money on time, he/she will receive the allotment.
Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.
The major reason behind issuance of these bonds is to reduce India's current account deficit.
PROS- Exchange traded, Fixed interest rate of 2.75% per annum, no risk/storage cost, and these bonds are exchange traded.
CONS- Market value of gold may depreciate.
"GOD of Luxury is GOLD !" and the GOD whom we TRUST and BELIEVE the most.
Gold has always had value to humans, even before it was money. Gold has always been powerful stuff. The earliest history of human interaction with gold is long lost to us, but its association with the gods, with immortality, and with wealth itself are common to many cultures throughout the world.
Gold became a part of every human culture. Its brilliance, natural beauty, and luster, and its great malleability and resistance to tarnish made it enjoyable to work and play with.
Generally when it comes to safe heaven investments with good returns people trust Gold. So the Indian Government has decided to launch a scheme. The Government of India will be launching the Sovereign Gold Bonds Scheme soon. As investors will get returns that are linked to gold price, the scheme is expected to offer the same benefits as physical gold. They can be used as collateral for loans and can be sold or traded on stock exchanges.
Visit : Gold Bond Scheme to know more.
Zerodha has taken initiative to help everyone invest in this scheme, we have introduced it as https://zerodha.com/gold/
" The earth turns to GOLD, in the hands of Wise " - Rumi.
Sovereign Gold Bonds
Bonds : Bonds are an instruments to collect the money from public with fixed interest rate and you can claim this money at maturity Time . Now recently GOI as launched SGB to collect the money from the public.
Who is issuing this Bonds ,The Bonds are issued by the Reserve Bank of India on behalf of the Government of India .
As investors will get returns that are linked to gold price, the scheme is expected to offer the same benefits as physical gold. They can be used as collateral for loans and can be sold or traded on stock exchanges.
More info follow this links Click here .
Faq's Click here .
Hello Gold Lovers!!!
RAVI: You are like God to me, But I don't have a Zerodha account yet. Tell me how do I open it?
AMIT: Visit www.zerodha.com and apply for it. You can even open the account instantly...!!!...:)
And Ravi Rushed towards his Laptop to Invest Smartly.....So Should you guys....:)
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Indians and gold have an attachment since time immemorial, and even today, the value and the attachment hasn't diminished. Up until now, Indians have had the option of investing in gold in the form of ETFs or Mutual Funds.
The government has now come up with the option of investing in gold sovereign bonds, an opportunity to get returns that are linked to the gold price. How does one go about doing it and what are the benefits?
How do I invest in Gold Sovereign Bonds?
These bonds issued by the RBI on behalf of the government, can be purchased from any bank or designated post offices or any brokerage house.
What are the benefits?
Firstly, you get a guaranteed 2.75% annually. You can buy these bonds in demat form along with the paper form. Demat form gives you the added advantage of being safe and secure. Although, the tenor of the bond is for 8 years, investors have the option to exit in the 5th, 6th and 7th years as well.
Purchasing Exchange-traded funds, gives you the option of just holding gold whereas mutual funds are, which are managed by asset management companies, don’t really give you a guaranteed return rate. But SGB gives you a promise of guaranteed return, and also is backed by the government.
You can use these bonds as collateral for loans, in addition to the option of being traded on exchanges giving investors the facility of exiting much earlier. However, the biggest reason for investors to consider this option would be the exemption of capital gains from the redemption of sovereign gold bonds.
Indians and gold have an attachment since time immemorial, and even today, the value and the attachment hasn't diminished. Up until now, Indians have had the option of investing in gold in the form of ETFs or Mutual Funds.
The government has now come up with the option of investing in gold sovereign bonds, an opportunity to get returns that are linked to the gold price. How does one go about doing it and what are the benefits?
How do I invest in Gold Sovereign Bonds?
These bonds issued by the RBI on behalf of the government, can be purchased from any bank or designated post offices or any brokerage house.
What are the benefits?
Firstly, you get a guaranteed 2.75% annually. You can buy these bonds in demat form along with the paper form. Demat form gives you the added advantage of being safe and secure. Although, the tenor of the bond is for 8 years, investors have the option to exit in the 5th, 6th and 7th years as well.
Purchasing Exchange traded funds, gives you the option of just holding gold whereas mutual funds are, which are managed by asset management companies, don’t really give you a guaranteed return rate. But SGB gives you a promise of guaranteed return, and also is backed by the government.
You can use these bonds as collateral for loans, in addition to the option of being traded on exchanges giving investors the facility of exiting much earlier. However, the biggest reason for investors to consider this option would be the exemption of capital gains from the redemption of sovereign gold bonds.