Sovereign Gold Bonds: Gold has been traditionally a popular mode of investment in India because of returns. People have been investing in this precious metal for centuries. However, keeping physical gold has always been a challenge. This led to the popularity of Sovereign Gold Bonds (SGBs) as they not only hold equal value to physical gold but also don’t involve any hassles of storing it.
However, the central government has decided to discontinue it citing the high cost of borrowing associated with the instrument.
Sovereign Gold Bonds Alternatives
The Reserve Bank of India (RBI) last issued SGBs in February 2023. With SGBs now being discontinued, here are a few alternatives for investors looking to bet on gold now.
Sovereign Gold Bonds Alternatives – Gold ETFs
A Gold ETF is an exchange-traded fund (ETF) that offers investors an opportunity to invest in the yellow metal. It is a fund that invests in gold bullion and tracks the domestic physical gold price.
In other words, Gold ETFs are units representing physical gold and trade on stock exchanges. One Gold ETF unit is equal to 1 gram of gold and it can be bought and sold like any other stock. They don’t just offer a convenient and cost-effective way to invest in gold but the purity of the metal is also assured.
Sovereign Gold Bonds Alternatives – Gold mutual funds
Gold funds are open-ended funds, also known as mutual funds, that directly or indirectly invest in gold reserves. These funds help you invest in gold without having to buy the yellow metal physically. Also, the taxation of gold mutual funds is identical to taxes implied on gold jewellery.
Meanwhile, Gold demand in India witnessed a 5 per cent on-year rise at 802.8 tonnes in 2024 supported by a reduction in import duty, and purchases related to weddings and festivals, and going ahead consumption of the yellow metal in 2025 is likely to be between 700-800 tonnes, according to the World Gold Council.
