Has anyone noticed how SGBs which have 5+ years maturity left are trading at a 7-8% premium to actual gold prices in last few days??
Can anyone help me understand this phenomenon
Current SGBs are trading upwards of 7700 per gram when their benchmark cost is more close to 7250…
Liquidity problem
Can you please elaborate
Is there any way we can liquidate SGB without selling in secondary market?
You can sell it back to RBI but there are fixed time periods, only applicable after 5 years of SGB issuance date.
Aug 2028 will automatically get matured soon anyway and you’ll get the proceeds as per the gold price then.
After 5 years how to sell to RBI from Demat? any guide or procedure?
I am not sure but can be related to this news?
Summary of the news is Gold id being imported under pretext of platinum alloy by adding 2% weight to gold , rule says all platinum it’s alloys which has min 2% platinum comes under import tax of 5% where as gold is taxed at 15%. This way importers are importing gold and selling with discounts thus distorting gold prices to an extent. This loophole should be fixed soon but till then we may see distortions.
Also far contracts demands extra premiums as physical gold needs to be stored and should have insurance so we can’t compare with current market prices without premiums.
A summary of news article as shared by siva. generated content below using Claude Sonnet 3.5
This news article is describing a significant issue in India's precious metal import market. Here's a summary of the key points:
1. Loophole exploitation: Bullion dealers in India are exploiting a loophole in import regulations by classifying gold-rich alloys as platinum to avoid higher import duties.
2. Increased "platinum" imports: In just four weeks from mid-June, India imported 13 tonnes of these metal consignments (mostly gold) labeled as platinum, surpassing the entire platinum import of 9.97 tonnes for 2023.
3. Classification rule: The loophole stems from a government rule that classifies any alloy containing 2% or more platinum by weight as a platinum alloy.
4. Duty difference: Under a trade agreement with the UAE, platinum imports are subject to only a 5% duty, while gold has a 15% import duty.
5. Market distortion: This practice allows dealers to offer discounts on gold, putting legitimate importers at a disadvantage and distorting local market prices.
6. Loss of tax revenue: The Indian government is losing tax revenue due to this misclassification.
7. Gold discounts: As a result, gold discounts in India have widened significantly.
8. Outdated rule: The classification rule was established when platinum was more expensive than gold, which is no longer the case.
9. Minimal value addition: Traders in Dubai are mixing small amounts of platinum and copper into gold bars to qualify for lower duties under the trade agreement, without significant value addition.
This situation highlights a regulatory loophole that is causing market distortions and revenue loss for the Indian government, calling for potential revisions to import classifications and rules.