Mumbai: Investors now have an opportunity to take advantage of a 5% dip in domestic gold prices since May. The Reserve Bank of India has introduced the first tranche of sovereign gold bonds (SGB) scheme for the first half of the financial year, allowing investors to allocate their funds to the yellow metal. Despite the recent significant surge in gold prices, wealth managers advise maintaining a balanced approach by maintaining a 5-10% allocation to gold in portfolios.
The first tranche of SGB, announced by the Reserve Bank of India, will be open for subscription from June 19 to 23, while the second tranche will open from September 11 to 15. Investors will need to pay ₹5,876 per gram of gold, availing a ₹50 per gram discount for digital payments.
SGBs offer an extra annual interest income of 2.5% until they reach maturity, without the need for owning physical gold,” explained Abhijit Roy, the founder of GoldenPi. “The assurance of purity and security that comes with SGBs, backed by 99.9% gold held by RBI, alleviates concerns about impurities and additional charges associated with physical gold.”
Moreover, the Union Budget for the fiscal year 2023-24 has made investing in gold through ETFs and mutual funds less appealing. These investment vehicles will no longer enjoy the advantages of long-term capital gains (LTCG) tax exemption, and any profits earned will be subject to taxation at the marginal tax rate starting from April 1. Conversely, capital gains from SGBs are tax-free if held until maturity, making them the most tax-efficient option for investing in gold.