Gold Prices Reach Unprecedented Heights

With gold prices hitting a record Rs 1 lakh per 10 gm, Sovereign Gold Bond (SGB) investors are contemplating profit booking. The surge represents a 26% increase since January and a 33% rise over the past year.

Historic Returns for Early Investors

Investors who purchased SGBs between May and October 2017, when gold was priced at Rs 2,830 and Rs 2,987 per gram, are now witnessing absolute returns of 221% as their bonds near maturity. Similarly, those who invested in April 2020 at ₹4,639 per gram can opt for buyback after five years, achieving 101% returns.

Flexible Trading Options Available

SGB holders have the flexibility to sell their bonds on stock exchanges or opt for early redemption through the government's biannual repurchase scheme after the fifth year. Upon completing eight years, bonds are redeemed, returning the accumulated capital to investors.

Expert Recommendations

Financial advisors suggest maintaining gold investments at 10-15% of one's portfolio, highlighting its role as a hedge against inflation and a stabilizer during global conflicts. Nikhil Gupta of Sage Capital emphasizes the benefits of SGBs, including a 2.5% annual interest, a ₹50 discount on digital purchases, no storage costs, and tax-free capital gains upon maturity.

Strategic Investment Advice

Given the halt in new SGB issuances, Gupta advises investors to hold onto their bonds until maturity to maximize benefits. For those heavily invested in SGBs, he recommends against additional gold investments and suggests diversifying into debt and equity instruments upon bond maturity.