Why Sovereign Gold Bonds doesn't match the returns of Goldbees

In last month gold has increased by 10% but what is the reason that prices of Gold Bonds didn’t increase by the same ?
They are hardly up 3-4%.

Gold bonds are not mapped directly to the Gold rate , rather it was like stock price which trades depend on supply demand . In gold bonds underlying asset is not the gold but the Govt of India Bond.

Having said that on maturity date you will get the Same price of gold trading in india.

but as you rightly pointed out you wont get the short term hikes or lows as it is a bond . if you want to get these highs and lows benefits better go for ETFs. but on ETFs you will miss out the extra 2.5% interest by GOI plus brokerage is high also for options trading SGBs get 100% cash component whereas GOld ETFs are treated as equity and get only 50% as non cash component.


Laws of supply and demand. I usually have offers for lowballing on these SGB’s I wish to accumulate. :laughing:

Sovereign gold bonds is a 8 year product and it is not useful if you want to invest in gold for few weeks or few months.

So over 5+ years, return on SGB will beat Goldbees returns. But in short term most likely it will trail Goldbees and other gold backed products. Mainly because with so many series of SGB, liquidity is not good in SGB to get proper price discovery on daily basis.