The Most Authentic Guide on Personal Finance and Investments

(Funny) Words of Wisdom : "Someone stole all my credit cards, but I won't be reporting it. The thief spends less than my wife did." ~ Henny Youngman

Jewellery Forget. Sovereign Gold Bonds Invest.

Statutory Warning 1: Investing too much money in Gold is injurious to your financial health.

Statutory Warning 2: Investing in physical gold (especially jewellery) is seriously injurious to your financial health.

Solution: Invest only 5 to 10% of your total corpus in gold. Invest only in Sovereign Gold Bonds.

In this connection, please note that the 2nd Tranche of Sovereign Gold Bonds is being issued by the Reserve Bank of India (on behalf of the Government of India) next week.

Salient features of the same are listed below.

Eligibility: Only for the resident Indian entities (individuals, HUFs, trusts, etc.)

Application acceptance dates: Jan 18 to 22, 2016 (Bonds will be issued on Feb 8, 2016)

Pricing: Rs.2,600 per gram of gold
[Based on the previous week’s (i.e. Jan 11 to Jan 15) average of closing price of gold of 999 purity as per India Bullion and Jewellers Association Ltd. (IBJA)]

Interest rate: 2.75% payable semi-annually on the initial value of investment

Investment limit: Minimum 2 grams and Maximum 500 grams per person per financial year (based on self-declaration)

Tenor: 8 year bonds (with early exit option from 5th year, on the interest payment dates)

Say no to Physical Jewellery. Bond with the Financial Sovereign Gold Bond.

Where to buy: Banks, Designated Post Offices and Stock Holding Corporation of India Ltd. (directly or thru' agents)

Denomination: In multiples of gram(s) of gold with a basic unit of 1 gram

Payment: DD, Cheque or Electronic Banking (including cash up to Rs.20,000)

Form: Govt. of India Stock Certificate. Can also be converted into demat form. 

Joint holding: Permitted (maximum limit applies to the first applicant only)

Redemption pricing: Based on the previous week’s (Mon to Fri) average of closing price of gold of 999 purity as per India Bullion and Jewellers Association Ltd. (IBJA)

Taxation: (a) Interest taxable as per IT Act (b) Capital Gains too taxable on the same lines as physical gold

Collateral: Allowed as collateral for loans; with same Loan-to-Value ratio as physical gold

KYC:  Voter ID, Aadhaar card/PAN or TAN /Passport i.e same as for purchase of physical gold

Liquidity: Would be traded on exchanges

Commission: Distributors shall be paid 1% of the subscription amount


... Don't "invest" in physical gold

... Bonds give you EXTRA interest income that jewellery, bars or coins don't

... Lot safer than physical gold

... No risk of impurity and no (wasteful) making charges

... Buying bonds reduce import of gold; which benefit both the economy and you

... Don't go overboard with your investment in gold; there are better investments that you mustn't ignore.

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