Akshaya Tritiya: Experts suggest gold bonds over physical gold

Sovereign gold bonds, which the government introduced a few of years ago, are today the best instrument for investing in gold, given the drop in rate of the precious metal in the past year.

As per a report in Business Standard, these bonds pay an interest of 2.5% on the first year’s price. Since they can be kept in the dematerialised form, they don’t require payment of making charges or value-added tax, as happens when you purchase physical gold. “These bonds are also listed on the stock exchanges. Holders of these bonds get cash equivalent at the time of maturity eight years later, which is tax free,” the report adds.

With Akshaya Tritiya happening tomorrow, purchasing gold has been considered auspicious and people continue to – even despite the losses – purchase the precious metal.

Experts, who spoke to Business Standard, believe that the rise of populism in Europe will still keep investors in gold.

The report adds that buying interest in gold on Akshaya Tritiya has been consistent. During the past few years, about 15-25 tonnes have been bought on this day. According to GFMS Thomson Reuters estimates, Indians bought 17 tonnes on Akshaya Tritiya last year. At current market prices, this translates into Rs 5,000 crore. Market experts expect even higher demand for gold this time – more than a billion dollars worth of sales.

While some investors buy gold as a hedge against inflation, others accumulate it for a marriage in the family in the future. In rural India, people trust gold more than other financial assets.