Sovereign Gold Bond Series V opens today: Should you invest in it?

The fifth tranche (Vth) of the Sovereign Gold Bond (SGB) scheme for 2021-22 opened for subscription on Monday. The issue price for the same has been fixed at Rs 4,807 per gram of yellow metal. Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.

This subscription of bonds will remain open till August 13, as per the Reserve Bank of India (RBI).

According to Nish Bhatt, Founder & CEO, Millwood Kane International - an Investment consulting firm, investment in non-physical gold, via digital or paper gold, is highly recommended as it provides high liquidity, no storage cost, and is easier to sell in comparison to physical gold.

“Investment in SGBs comes with an interest coupon payable semi-annually. Investment in SGB is a superior alternative to physical gold. The investments in non-physical gold will help the government to keep a check on the currency and larger fiscal deficit,” Bhatt said.

On gold prices, he said that they have softened in the past few weeks to touch a one-month low.

“In the past one week alone, gold has dropped nearly Rs 1,000/10gm in value. The rising US Dollar and Treasury yields on the back of a sooner than expected policy tightening by the Fed have largely led to softening of gold prices. Gold prices domestically and internationally have traded in a narrow range in the past few months. The latest variant of the virus, the pace of vaccination, unlocking, and signs of policy tightening by the Fed will guide gold prices going forward,” Bhatt added.

Further, Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart added that gold shows free-fall after strong US job reports but it is expected to hold its long-term support levels $1,680-1,700 zone.

Jain also believes that it’s a good time to subscribe to SGB at lower levels.

With SGBs, investors do not have to worry about the storage of gold as it is in a demat form. It pays interest of 2.5 percent along with the price appreciation which no other gold investment offers.

After investing, individuals get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash.

Those looking to subscribe to the SGBs in this tranche can apply through banks, Stock Holding Corporation of India Limited (SHCIL), stock exchanges NSE and BSE, designated post offices, or through agents.