Is this a good time to invest in gold bonds?

The scheme has many advantages . There are no hassles such as purity checks, making charges, and locker charges. One can also avoid capital gains tax during redemption in case the gold price is higher, making them tax efficient.

Some experts say, “In the long term, gold has given around 7 per cent returns annually. Add to that 2.5 per cent returns on the initial investment on SGBs, and returns look quite attractive at 9.5 per cent. Between 2008 and 2011, gold gave an internal rate of return of 26 per cent".Given these numbers, experts believe the current volatility is likely to push the prices beyond their highest peak.

“An infusion of liquidity as a policy action by the Federal Reserve and European Central Bank, and the potential ignition of the trade war may lead to all-time highs for gold.” experts believe.

There are not too many negatives to this instrument. While liquidity can be an issue with an eight-year maturity, it can be sold to a bank after five years. Sales on stock exchanges can happen any time. However, you need substantial quantities to be able to buy or sell.

Without a doubt, this remains the most preferred way to invest in India. While there are many advantages, the lack of a well-established robust secondary market for trading becomes a minor constraint.