Gold prices shot past the Rs 38,000 per 10 gram mark on Wednesday for the first time ever amid heightened trade tensions between the US and China. Are you hesitant to invest in gold now? Don't worry, here's how you can invest in the yellow metal and still manage to save some money.
The Reserve Bank of India has announced the Sovereign Gold Bonds (SGB) 2019-20 Series III at a price of Rs 3,499 per gram for online purchases. The current issue of SGBs, which are also known as paper gold, opened on August 5, 2019 and will end on August 14, 2019.
"Government of India in consultation with the Reserve Bank of India has decided to allow a discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors, the issue price of gold bonds will be Rs 3,449 per gram of gold," said the Finance Ministry in a statement last week.
Currently, 10 grams of gold costs around Rs 38,000. 1 SGB is equal to 1 gram. Hence, if you buy 10 units of SGB, here's how much you can save:
1 SGB (after discount of Rs 50) = Rs 3,499
So, cost of 10 SGB will be 10 x 3,499 = Rs 34,990
Hence, you'll be saving Rs 38,000 - Rs 34,990 = Rs 3,010
Additional benefits:
By buying the paper gold, you will not only save Rs 3,000, but you also don't have to worry about storing SGBs like physical gold.
Apart from that, SGBs will also fetch you an interest rate of 2.5 per cent per annum. The interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
Just like physical gold, you can use these SGBs as collateral for loans from banks, financial institutions and non-banking financial companies (NBFCs). The loan to value ratio will be the same as applicable to ordinary gold loans prescribed by the RBI from time to time.
Tax deducted at source (TDS) is not applicable on paper gold bonds.
Where can you buy SGBs from?
Commercial banks
Stock Holding Corporation of India Limited (SHCIL)
Designated post offices
Recognised stock exchanges - National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange (BSE)