What type of gold bonds I should buy - closer maturity of further away maturity?

Bonds
1

I see a lot of options for sgb …starting from 2023 to 2031

Can someone advise - should I choose bonds that matures closer like 23 /24 or further away like 2030/2031?

Please give reasoning as to why you recommend closer/further maturity?

@viswaram @Prayag @Jason_Castelino @KarthikAcharya @TradeB2B @Akash_Shah @pankushri @cvs @Gnome

2

@curiousvi SGB has 2 major advantages over physical gold

  1. It pays an interest (2.5% to 2.75% based on the series)
  2. it can be pledged for trading

To get max interest benefit - the tenure has to be the longest. Since you can exit it most of the time (according to liquidity) there is theoretically no harm in taking the max tenure possible.

No one would really know if gold will fall in value sometime in the future - so an outright buy cannot be determined per se at the current trading price.

The only disadvantage is - you dont own gold. After the tenure, the amount gets returned to you. And if you so desire can buy at the market price then.

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3

I second @viswaram
No one really knows where gold prices will be in short or long term. Better go for long term and reap ~2.5% plus pledge and short long term far otm index options (only if you are willing to risk it) and make some extra on the side. Or you can also do your regular trading related activities as SGB are treated as cash equivalent.

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4

So do u mean at this price - it is not advisable to buy sgb with long term maturity?

5

honestly i dont know the answer to that

6

curiosvi ,

All depends on what you want to do with SGBs , most of the guys buy SGB for two reasons

  1. Blind hedging for their equity portfolio
  2. To get liquid collateral

In both cases if you keep the SGBs for longer term more than 5 years you get tax benefit in terms of LTCG + 2.5% interest till the time you keep

so if you buy any SGB and keep for 5 years LTCG is same , But 2.5% interest varies and depends on the issue price .

so I would suggest go for the issue price which has the max issue price . just to reduce your research time

SGBmar31iV issue at ±5600
SGBdec30III issued at ±5300

these are the highest issue prices , but if you go for nearest to mature i.e issued in 2018 at rates of 3500- 4000 you will get less interest .

I am not seeing any benefit to buy near to mature SGB till date so go for highest issue price SGBs and max maturity+ no need to pay other charges/brokerage multiple times

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7

@curiousvi https://fincues.com/goldbonds

Check this, you will see nearest one are trading with less discounts. Look this everyday sometimes you might get good discount.

8

It all depends on how gold rates will be behaving in future. If they rise then all the gold bonds will give good return.

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