Basically ETF follows the MF process and NAV is calculated at the end of the day, The below link should help you in understanding more on it.
On the SGB , they are sold at a discount to the current price and in the below article low liquidity is mentioned as main reason…
Hope this helps.
Those who are investing in latest GOLD BOND , it’s being issued at 3966, in market its available at cheaper rate around 3750.
Clear advantage of rs 2000 per 10 gms
An interesting article… when gold is ruling at an all-time high… close to 7 years high. This article gives the perspective wrt to US stocks
Why there is a huge gap between price of physical gold & Gold etf for per gram of gold?
Hello Gold experts,
Very helpful thread here. I have some questions which can mostly be answered by someone who has experience of trading SGBs in secondary market.
The interest in credited to the bank account every 6 months irrespective of whether you sell it prematurely or not, is that correct?
Can SGBs be sold after say one month in secondary market? What are the negative or positive consequences of doing that?
As it is mentioned here, SGBs are many a times available at a significant discount in secondary market compared to issue price. In your experience how easy or difficult it is to sell in secondary market? Let’s say I need the funds for some reason, can it be sold in a week or so in secondary market.
Let’s say one decides to buy from secondary market. There are so many SGBs available for different time periods. What should be the parameters to consider to decide which SGB to buy. For example, should I buy SGBs which are going to be matured sooner? Or should I go for newer ones? Should we go for the one which has higher volume? I also noticed that some SGBs have much higher volume than the others, why is that?
In my case, I dont plan to hold SGBs until maturity. I just want to invest in gold and add some safety to my pf. Apart from tax benefits being missed, is there any other negative consequences of selling early in secondary market?
@mylu @HIMSHAH any ideas and advice would be really helpful as this is my first time buying Gold paper.
Thanks
It’s credited to whoever is the current owner of the SGBs.
Yes, it can be sold anytime. The consequences of selling prematurely (anytime before maturity) is that you have to pay capital gains tax on the capital gains. There is no capital gains if you keep it to maturity (irrespective of whether you bought from RBI or secondary market).
It’s not easy to sell - that’s why there is a discount on both buying & selling. But I think you can sell it within a week as long as you sell offer it at the right discounted rate.
Thanks for the reply Vijay.
Let’s say one decides to buy from secondary market. There are so many SGBs available for different time periods. What should be the parameters to consider to decide which SGB to buy. For example, should I buy SGBs which are going to be matured sooner? Or should I go for newer ones? Should we go for the one which has higher volume? I also noticed that some SGBs have much higher volume than the others, why is that?
If u want to keep for longer period say for 2 years , buy sgb wich offers most discount . But if u want to sell and need money in emergency then buy sgb wich has near maturity because they have less discount but more liquidity
Sgb price are decided in two aspects.longer maturity has more discount and less liquidity and vice versa
SGB JULY 25 , SGB MAY 25 has good liquidity and small buying sellling spread. So is the case with starting series of 23 and 24. ( this no denotes maturity month and year. Also check price in bse and nse both.
Thats super helpful. Thanks a lot @HIMSHAH
Hi Vijay, are you sure that there are no capital gains on SGBs on buying from the secondary market (holding it till maturity)? I learnt from people in the Zerodha Q&A forum that for capital gains to be waived off, you need to buy from RBI and hold for the full 8 years.
Their is no clarity on it. factually RBI said no capital gain tax on it if u buy from them , but u can sure show in long term and get indexation benefits on it if hold for more then 3 yrs.
Section 47 of the Income Tax Act, Sub Section (viic) – Transactions not regarded as Transfer - says “any transfer of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by way of redemption, by an assessee being an individual;” .
Thus, there is no distinction between primary holder and one who has bought the bonds from the secondary market. Redemption is not a transfer of capital asset, and therefore there is no capital gains tax.
https://www.rbi.org.in/scripts/FAQView.aspx?Id=109
All FAQ for sov gold bonds
How to select best gold etf among all listed etf.
The performance will be similar for all the funds as it is linked to the movement in the price of the underlying (Physical GOLD).
Focus on below 3 parameters will help you to choose the best among the list:
Trust that the below picture, which shows Mr. Markets Verdict, will help you to study further. Do share your findings for others benefit - What you chose and on what basis?
But sov gold bonds are far better then any Gold etf.
Eg SG Bonds carries 2.5 % int .
Also u don’t have to worry about creditability of any MF as this bonds are issued by RBI. Also zero expenses ratio. No capital gain tax where as in etf u have to pay long term capital . Liquidity is good in many sov bonds series like july25 series or may 25 series.
I agree that the total return on the Sovereign Gold Bond is higher than Physical Gold or Gold ETF. However, LTCG is applicable for both Sovereign Gold Bond and Gold ETF.
Maximum Investment limit (4 KG for an individual) and 5 Years Lock-In Period in the case of Sovereign Gold Bonds must be considered.
A good comparison among the 3 is listed here:
Their is no lock in period in Sov gold bonds . I regularly trade them on bse and nse. U can encash anytime u want.
Also please read post of https://forum.valuepickr.com/u/Chandragupta
Posted above for tax clarity
