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Gold prices at all-time high: Here is how to buy gold around Rs 2,400 per 10 gram cheaper by investing today

Amitava Chakrabarty
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Taking cues from global trends, gold prices in India have jumped over Rs 930 per 10 gram on Thursday to hit the all-time high of over 35,800 per 10 gram in the bullion market in New Delhi. Interestingly, the price of Sovereign Gold Bonds 2019-20-Series II, which is scheduled to be closed on Friday, July 12, 2019, has been quoted as Rs 3,343 per gram for offline purchase and Rs 3,393 per gram for online purchase.

So, with the price of around Rs 33,400 per 10 units or per 10 grams, the investors may get the yellow metal about Rs 2,400 cheaper by purchasing 10 units of Sovereign Gold Bonds compared to buying physical gold that is priced around Rs 35,800 per 10 gram.

Not only you may save about Rs 2,400 per 10 gram, but there are several other benefits of investing in Sovereign Gold Bonds over purchasing physical gold or gold jewellery.

First of all, keeping physical gold or gold jewelleries involves security issues as chances of losing gold due to theft, burglary etc are there, but there is no such concerns in holding Sovereign Gold Bonds.

To protect physical gold or gold jewelleries, people need to hire lockers and/or purchase insurance and thus need investments (as banks ask for FDs to allot lockers) as well as maintenance cost like locker rents, renewal premium for insurance etc. On the other hand, not only there is no such costs involved in holding Sovereign Gold Bonds, but the investors also gets 2.5 per cent per annum assured interest on the value of the Bonds.

Buying gold jewellery involves making charges over and above the price of gold, which the buyers lose in case they sell the jewellery, but in case of Sovereign Gold Bonds, the investors get the money back at the current gold prices at the time of maturity or at the time of selling the bonds.

While you may sell physical gold or gold anytime, there is a drawback that the tenure of Sovereign Gold Bond is 8 years, but early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. However, you may sell the bonds in secondary market, where prices are generally remain slightly lower than the spot gold prices and also there are some liquidity issues, despite the government’s decision to allow it to be traded like stocks.

Another drawback of Sovereign Gold Bond is that the bond has intrinsic value and an investor cannot touch and feel it like physical gold or the investor can’t wear it like gold jewllery.

However, if you are considering to buy gold only for investment purpose, hurry and invest in Sovereign Gold Bonds today to enjoy about 6.7 per cent gain over the current gold prices.