Sovereign Gold Investment Options

On Zerodha gold investment page (, I see 2 different options to invest - ETF and Bond. Can anyone please explain me pros and cons of both the investment options?

ETF’s are Exchange Traded Funds issues by Fund Houses, they are same as Mutual Fund’s but are traded on Exchange and you can Buy and Sell them anytime throughout market hours.

You can learn more about SGB here What are sovereign gold bonds?

ETF has charges which you pay from NAV while SGB pays your 2.5% interest (taxable) ETFs are no longer advantageous…

then why there is still volume in it compare to the SGB ?

People don’t have knowledge about SGB

Is there any difference in return of both the instrument? With your comment I’m assuming ETF will have 2.5% less return. Is there any return difference apart from 2.5%?

Is there any website to check on gold bonds return?

2.5% + ETF expenses… Close to 4% every year…

Under any circumstance can we exit from gold bond before the 5 yrs of lock in period?

Couple of days July 2020 series SGB was trading lower price than Current open Aug issue.

Why do people still invest with higher price?

Does it make any difference to Buy in exchange vs buying during issue?

Tax, 2.5% returns and etc any changes?

No difference, all the benefits are passed on to the Buyer.

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Thanks for your valuable info.

Just curious to know.

Why do people buying directly from new issue? Instead buying at lower price.

There is not much liquidity in secondary market.

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It’s not clear whether anyone buying from the secondary market will get the tax exemption at the time of maturity

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Any redemption of Sovereign Gold Bonds by an individual is not regarded as a “transfer” for the purpose of computation of Capital Gains, as per clause (viic) of section 47 (Income Tax Act).

So it may be inferred that

  1. Even premature redemption (which is allowed from the 5th year), will not be regarded as a transfer (since the relevant provision uses the words “by way of redemption” and not “at the time of maturity”)
  2. This benefit is available only for an individual who holds the bonds as an investment and not as stock-in-trade.
  3. The provision does not specifically exclude purchases from the secondary market, for the purposes of availing the benefit.

Compare that to the response that we got directly from RBI

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Yeah, that is why I told that the provision does not specifically exclude purchases from secondary market. As it stands, it may be inferred either way. But a mere reading suggests that purchases from secondary market are not ineligible.

P.S. Maybe edit your screenshot to mask your personal details. But yeah, it is up to you.

What is the benchmark rate for gold redemption at maturity by RBI?

We need to find a seller holding these gold bonds in demat account to buy from him…Many hold the bonds without demat account…is this the liquidity crunch ur talking in secondary market??

It is clear that even RBI doesn’t know. So it is better to assume the worst and plan accordingly…

Current rate at

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