High Gold Prices Don't Stop People from Buying SGBs
Investors in India are increasingly turning to Sovereign Gold Bonds (SGBs) for their gold investments. Even though gold prices are rising rapidly, many people still choose to invest in SGBs. Since 2015, 30% of all SGB units have been bought in this financial year alone. Investors believe that gold prices will keep rising, so they are not worried about the current high prices. This belief has made SGB units very popular, and they are trading at higher prices in the secondary market.
The National Stock Exchange (NSE) reports that out of 64 gold bonds available for trading, 62 are being sold at a premium. On Monday, the price of 24-carat gold (999) was Rs 72,190 per 10 grams, according to the Indian Bullion and Jewellers Association (IBJA). Salil Shah (MD of Lakshmishree) thinks that gold prices will increase even more. He says that the demand for gold has increased because of central banks, ETFs, and individual buyers. People who don’t want the hassle of buying physical gold prefer SGBs, so there is so much interest in these bonds in the secondary market.
Investors are not in a hurry to sell their SGBs even though gold prices are rising. Experts say investors with demat accounts can buy sovereign gold bonds in the secondary market. However, most gold bonds are trading at prices higher than the market rate. The SGBDEC25 (2017-18 tenth series) has the highest premium of 6-7% in the secondary market and many other series.
The government allowed the purchase of the first series of this financial year from June 19 to June 23, 2023. The fourth and final series (67th gold bond), which was subscribed on February 21, will be available only after June 2024.
SGBs are a safe and profitable investment option for those looking to invest in gold without the problems of buying physical gold. Investors can benefit from the rising gold prices and the interest provided by the bonds. Moreover, SGBs remove the need for storage and insurance costs, making them a hassle-free investment.
With the ongoing economic uncertainties, gold remains a preferred asset for investors. The rising demand for SGBs shows that investors trust in gold’s value and want to secure their wealth in a stable and appreciating asset. As gold prices keep rising, SGBs are expected to become even more popular, making them a top choice for Indian investors.
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