Government of India has announced the Seventh Series of Sovereign Gold Bonds for the Financial Year 2020 - 2021. SGB will be issued by Reserve Bank of India on behalf of GOI.
Sovereign Gold Bonds are open for subscription from 12th
October to 16th October 2020 and will be issued on 20th October
2020.
Sovereign Gold Bonds are issued in units of One Gram and
Price is calculated by taking average close price of 999 purity gold of the
last three trading days set by Indian Bullion and Jewelers Association.
SGB has the Fixed Tenure of 8 years and Interest of 2.5% is
paid semi-annually to the investors on the Initial Investment Value.
SGB was introduced by GOI in 2015 to curb the import of
physical gold and promote digital assets. Investors Preferred SGB over Physical
Gold as an alternative due to added advantages. By looking at the tremendous welcome,
SGB is issued every month by the RBI guaranteed by Government of India.
Performance of SGB Issued so far in FY 20 – 21: (09-10-2020)
Gold Prices has been in Uptrend since the begging of the year. Due to COVID 19 Pandemic, All the world markets has seen major draw down
and its getting recovered slowly. Gold was seen as the safe bet by the
investors during the global meltdown, Gold prices has climbed to All-time High.
From the lows of 38500 in March 2020 to 56200 in August 2020. Then Gold price was consolidated in the range 56K
to 49K.
Now Gold Price has given a Triangle breakout on 09-10-2020
in daily time frame. Gold Price is expected to move up during the quarter. Gold
has recovered almost 3.5% from the lows of 49K to almost 51K in 15 days.
It is the perfect time to invest in the Sovereign Gold Bonds.
Mentotax recommends readers to invest in SGB for better returns and liquidity.
· Interest Pay-out of 2.5% on the initial Investment
· Eliminates making charges and purity concerns
· Zero risk of handling physical gold
· No TDS applicable on interest payment
· Guaranteed by Govt Of India, No Risk of Default
· Diversification of Investment Portfolio
· SGB can be Traded in Stock Exchanges
· No Capital Gains on redemption if held till maturity
· SGB returns are higher than physical gold, returns are linked to gold price
· SGB can be used as collateral for loans
· SGB is exempted from GST (Goods and Services Tax)
· SGB can be held in Physical/Demat Form.
Sovereign Gold Bonds are must in the portfolio of every
individuals, Gold is negatively correlated to equity. Gold in portfolio always
helps us to reduce the draw down. Mentotax recommends to have minimum 10 -15% of
Investment in gold for asset class diversification and It’s the perfect to
accumulate gold via SGB.
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