What's the best option to invest in gold?

[rupeshmandal]

@siva-reddy

Giving my personal opinion.

It has to be a personal opinion only. Because Zerodha is just a stockbroker and not an investment advisor. Be very mindful of every word that being a representative of Zerodha you or anyone from the company speaks. Because it may go against Zerodha as per the SEBI rules. e.g. when Zerodha publishes a facebook or twitter post that SGB is ‘the best’ option, in legal terms, Zerodha is claiming it so and is marketing it, which it can’t. You guys need to be more careful and watch your tongue. Also this site is now being aggregated on Google News which only lists official sites, so there is a responsibility too.

@siva-reddy

we can also think government coming out and saying all the money in worthless now

Remember Demonetisation?

@siva-reddy

I am not going to ask who is seeing gold is being bought and certifying it’s quality just because there is some scam in china. china gold fraud: China's biggest gold fraud, 4% of its reserves may be fake: Report - The Economic Times

I had already covered it in detail earlier - China Gold Fraud - How safe are the Gold ETFs? - #17 by rupeshmandal

@siva-reddy

Seriously? you won’t get capital appreciation at the end if there is any?

The answer lies in the question itself - “if there is any”. Need I say more?
8 years is a long period of time. Out of which 5 years are under lock-in. You can lose as well since it’s market-linked. This thread covers how volatile this yellow metal is over time. Should you invest in gold?

@siva-reddy

Of course, volumes are low in secondary but there is some improvement and a long way to go.

At least we agree on something.

@siva-reddy

Not sure what you want to convey here

When an investor is redeeming, or at the time of maturity, the Govt has to pay back the value of Gold at the time of maturity. Where is Govt obtaining the difference amount between the buy price and the maturity amount, if the price has soared? Has Govt. increased its Gold reserves with that SGBs investments? If buying SGB helps RBI increase the Gold reserves, then it is helping in nation-building and making the economy stronger. But there is no Gold backing in SGB so I am not sure about how it helps. In the first tranche launched in 2015 SGB received about Rs 260 Cr investments. Gold price has already more than doubled since 2015 as we speak and by 2023 when Govt has to pay back the investors, where would it fund it? Because there is no real Gold backing. Remember, Govt is also giving 2.75% annual interest on those tranches. These are the reasons I am enquiring.

It’s not about pessimism but seeking the truth.
And moreover repeating what I had mentioned before:-

@rupeshmandal

Please note that I am not against SGB. If one makes an informed and strategic decision about when to buy and sell and which tranche of SGB, it may be profitable. It’s just that an investor should be aware of what he is getting into.