In April-June, gold ETFs saw net inflows of Rs 2,000 crore. However, gold bond sales in the first four months of FY21 have been the highest for any financial year since the launch.
A total of Rs 5112 cr worth more than 10.8 tonnes of SGBs have been sold by the government, raising Rs 5,112 crore ($680 million) in the process. This is almost equal to the gold import bill for April-June 2020.
In 2016-17, an amount of Rs 3,481 crore was raised for the entire year. However, the government had sold bonds worth 11.4 tonnes that year.
“SGBs have turned out to be best digitised instrument for investing in gold, which has emerged the best performing asset class. A record number of investors in the new series of SGBs reflect wide acceptability for digitised investment. Gold has given a YoY return of 41 per cent, with expectations of decent returns for the rest of the year. High net worth individuals, as well as retail investors are investing in SGBs,” said Shekhar Bhandari, senior executive vice-president of Kotak Mahindra Bank.
SGB is a form of paper gold. During the lockdown, when jewellers were closed, this was an easier way to invest in gold without taking physical delivery.
Bonds are beneficial by way of being pure investment products. Traditionally, gold investors used to buy jewellery, and refrained from selling them later owing to sentimental reasons.