Investors Likely to Ditch Bank Savings for Gold Bonds
Kolkata: The seventh tranche of sovereign gold bond (SGB) is expected to receive good response as the money deposited in banks during the demonetisation drive is likely to be pumped into this scheme, reckon marketmen and analysts.
The scheme is hitting the market after a gap of four months, and is the first after the government’s note-ban initiative. Also, it is priced nearly 1.7% cheaper than the prevailing gold rate in the market.
“Gold is one of the best performing asset classes in 2017 and the yellow metal has gained investors’ interest once again. Dematerialised, tradeable and interest bearing make SGB an excellent instrument. It is definitely better than bars and coins,” said Shekhar Bhandari, business head for global transactions and precious metal at Kotak Mahindra Bank.
Gold has appreciated by almost 9% since the beginning of this year. Total investment demand for gold in 2016 declined by 17.1% to 161.5 tonnes, according to World Gold Council. The seventh tranche of SGB opens on Monday and closes on March 3, and the bonds will be issued to eligible applicants on March 17. The bond offers a 2.5% interest per annum to investors.