Last Updated on August 22, 2022 at 11:16 pm
Series VIII of Sovereign Gold Bonds 2020-21 will be available from November 09-13, 2020 with Settlement date November 18, 2020. During this period, the price will be Rs. 5177 per gram for offline subscriptions. Online purchases will cost Rs. 50 less. This is marginally higher than the seventh tranche which opened at Rs. 5041 and sixth tranche (Rs. 5117). However, it is still lower than the fifth tranche price of Rs. 5334.
Who should buy these bonds? If your goal is to accumulate gold for future use, then buying Sovereign Gold Bonds is a risk-free, tax-free way to track the price of 24-carat gold. Considering jewellery is made with 22-carat gold + making changes + taxes, the future value of these bonds should pay of most of these costs.
If your goal is to profit from the price of gold with tactical entry and exit then consider Gold ETFs like Gold Bees (for intraday buy/sell) or a gold fund. This is an example of tactical buying: Is this a good time to buy gold? A tactical buying strategy for gold
If your goal is to allocate a small portion of your portfolio to gold, then a multi-asset fund like ICICI Multi-asset can get the job done in a tax-efficient way provided the fund is the core portfolio holding with considerable weight.
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Sovereign Gold Bonds are best suited for buying and holding for eight years. You can try to sell them mid-term in the secondary market, but as the liquidity is low, you may not get the desired price. Therefore they are unsuitable to be part of a portfolio with say 10% 0r 15% allocation to gold since this requires annual rebalancing.
What return can I expect after eight years? No one knows. Gold is simply too volatile (as much as equity or more) to predict future returns. This is a chart of eight-year rolling returns of gold in the past. Notice how much returns can swing.
In summary, buy Sovereign Gold Bonds only if your intention is to buy and hold and your purpose would be served by such an action.
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