Stock Market and Investing

Investing in Gold Bond- safer option than investing in Gold and yields better return

Investment in gold bond is an investment in gold; however, it doesn’t involve investment in the form of coin, jewelry or a gold bar. Its value increases with the increase in the market rate of gold and is a pretty safer investment option. It offers better return as compared to any other form of gold investment, however, you won’t get an opportunity to behold and feel the gold. In place of a gold bar or a coin, you receive a paper for your investment in these gold bonds. These bonds are available in both in demand and digital form.

Investment in Gold Bond is better option for those who wish to invest in gold; there are no chances of theft, fetches you little higher return besides appreciation in value of gold and is theft proof

Investment in Gold Bonds
Investment in Gold Bonds

Benefits of Gold Bond

There is a perception that gold would never fail. It is a belief that the value of gold will always increase with the level of general prices. Hence, many of the Indians believe gold as the safest option in terms of investment. Some of the benefits of gold bond can be listed as below:

  • The investment value of the gold bond increases with the increased price of gold.
  • The bond offers a better return as compared to physical gold since it also provides interest on the investment.
  • You don’t need to worry regarding the safekeeping of your investment since you can keep the gold bond in digital form.
  • You would also save on the expenses of maintaining a locker since the gold bond could be kept in Demat account.
  • There is also no possibility of cheating as there can be no impurities involved in the gold bond.
  • Gold bonds are better off as compared to exchange-traded funds (ETFs) since it does not involve any management charges
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Tenure of Gold Bonds

The bond value is subject to the gold volatility. The bond could give negative returns in cases when the prices of gold go down. For mitigating such volatility, the government is offering long term gold bond. The tenure of such gold bond is 8 years. However, you are provided with the option to exit after a period of 5 years.

Risk involved in Gold Bond

The gold bond like other investment types such as investment in properties, shares, etc. also carries the price risk. If the price of gold goes down the value of the gold bond would also go down. However, the risk of default is negligible. These bonds are issued on behalf of the Indian Government by the Reserve Bank of India. Hence, the bonds carry a sovereign guarantee. The possibility of government getting bankrupt is very minimal.


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