To meet the urge of people to invest in gold, the Series III of Sovereign Gold Bond of the financial 2018-19 has been opened for subscription on November 5, 2018, the auspicious day of Dhanteras. The Reserve Bank of India (RBI) has announced the issue price of per gram of gold of 999 purity at Rs 3,183 for normal applicant and Rs 3,133 for online applicants – with a discount of Rs 50 per gram – for the 3-day opening period, which will end on November 9, 2018. The maximum limit of subscription for both individuals and Hindu Undivided Family (HUF) in a financial year is 4 kg, while the limit is 20 kg for trusts and similar entities notified by the government from time to time.
Sovereign Gold Bonds (SGBs) are government securities, which allow you to invest in gold in a safe and secure way. As the government ensures the security of gold, SGBs eliminate the risks of storage, purity, loss of making charges etc. Moreover, the quantity of gold for which investments were made in SGB also remains protected as an investor receives the ongoing market price at the time of redemption or premature redemption. It not only gives you the peace of mind, but also an opportunity to earn 2.5 per cent interest per annum, which will be paid half yearly. Although the units of gold, for which investments were made, remain protected, there may be a risk of capital loss if the market price of gold declines at the time of redemption.
Other options to buy gold online, which eliminates the risks and cost of storage, are e-gold, gold ETF and gold funds.
E-gold: You may buy small quantity of gold in dematerialised form through the National Spot Exchange Limited (NSEL), which may be sold later either at the prevailing gold prices or may be converted in physical gold. There are no additional costs involved for holding e-gold, but you have to buy or sell it at spot price.
Gold Funds and ETFs: Gold funds and gold exchange traded funds (ETFs) also provide options of investing in gold-related stocks online through the stock exchanges. Like e-gold, you may invest in such funds in small amounts and may also redeem the units at the prevailing gold prices. Although such funds give you more diversification, but have some annual fund management costs.
Physical gold: The most popular investment in gold – despite the costs and risks of security, storage, purity, making charges, locker charges etc – is physical gold in the forms of jewellery, ornaments, coins and bars. As the purity of gold and making charges vary from jeweller to jeweller, you have to select the place from where you want to purchase the gold items judiciously.