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Why Should You Invest in Sovereign Gold Bonds over Physical Gold
05 Jan 2023

When you think about investments for Indians, you instantly get the picture of physical gold investment. Gold, in India, is not just invested in for its decorative and auspicious value, but for pure investment, in the form of biscuits, bricks, coins and jewellery. A traditional practice that has proved secure in the long run, Indians believe that selling physical gold at any time in future will let them see a return on their investment. Nonetheless, Indians are gradually warming to investing in sovereign gold bonds or E-gold  for many reasons. 

- What is a Sovereign Gold Bond?

Before you consider whether to invest in sovereign gold bonds versus physical gold, you should know what sovereign gold bonds are. Sovereign gold bonds are issued by the Reserve Bank of India, and are substitutes for physical gold. They are issued as government securities and offer many advantages. 

Advantages when You Buy Sovereign Gold Bonds

The only disadvantage of buying sovereign gold bonds over physical gold, if that translates to jewellery, is that you can’t wear bonds. For the pure investment, as several people buy gold for this purpose, sovereign gold bonds are better to go with over physical gold anyday, for the following reasons: 

  • Nil Charges for Making - As sovereign gold bonds are securities in place of actual gold that you may buy in terms of ornaments or bricks, etc, there are no extra making charges levied on them. While you buy physical gold, making charges make you pay more than you would for bonds. Furthermore, while selling physical gold, making charges are deducted, so you lose out there. 
  • Storage Issues - When you buy sovereign gold bonds, you don’t have any storage facility or security problems as these are digitally stored (hence, the E-gold moniker). You may get physical certificates, but these are more easily and securely stored than ornaments and other forms of physical gold. 
  • Purity - In terms of purity of sovereign gold bonds you buy, there is no doubt as to its value. You get certified ‘999 purity’ which cannot be disputed. 
  • Market Value - You can hold your sovereign gold bonds as an investment for a period and sell them at market value, along with interest you earn on an annual basis on the amount you have invested. 
  • Ownership Options - Any Indian resident can invest in sovereign gold bonds. Additionally, you can invest in these jointly. People see this as an attractive option against physical gold whose ownership documents are not as well defined. 

Easily Accessible

If you want to know how to buy sovereign gold bonds, you can approach any bank for an application form. Sovereign gold bonds are also available online through financial corporations like Motilal Oswal, and the process to apply and acquire these is simple. 

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