 "New gold bond issue opens")
With a new sovereign gold bond issue being offered at Rs 3,119 a gramme from Monday, the high premium at which the earlier bonds were traded makes the new issue attractive.
However, the premiums which used to be around 10 per cent to the spot market price of gold, shrunk on Monday on the BSE to almost 5 per cent and to 3 per cent on the NSE, where they’re traded as listed securities. This fourth tranche is the first issue in the current financial year.
Gold has emerged as the best asset class in 2016 so far, giving 23 per cent return in India. Globally, exchange traded funds (ETFs) have seen very good demand, mostly from European investors.
The total response on day one couldn’t be known. The BSE got bids for 27,475g, worth Rs 8.57 crore in bonds. The NSE figures were not available. Banks and other institutions are also selling the bonds. NSE’s electronic mutual fund platform has also started offering subscription to sovereign gold bonds. A portal, NMF-II, has been made for distributors to place mutual fund (MF) transactions on behalf of clients. As of now, NMF-II is the only online MF platform offering sovereign gold bonds to investors.
The price closed 5.2 per cent lower on Monday, with over a kg worth traded on the BSE at Rs 3,250 a gramme,still at a premium to the physical market closing price of Rs 3,097 a gramme for 999-purity here. NSE bonds closed at Rs 3,186 a gramme, with 885g traded. Trading volume was thin, though double the usual.
Investors have put Rs 1,318 crore, equivalent to 4.9 tonnes of gold, into the first three tranches at the then prevailing prices. The first issue was at Rs 2,684 a gramme, which closed on the BSE at Rs 3,250. At the Zaveri Bazar spot market here, 999-purity closed on Monday at Rs 3,097 a gramme.
Also, the minimum investment, earlier two grammes, has now been reduced to one gramme to align these with the listed bond norms. Further, in the physical gold market, demand is weak. Only 23 tonnes of gold was imported in June, a big part of which is estimated to be for re-export. Since April, gold import has come down to 25-30 tonnes a month, against the usual 60-70 tonnes.
However, the premiums which used to be around 10 per cent to the spot market price of gold, shrunk on Monday on the BSE to almost 5 per cent and to 3 per cent on the NSE, where they’re traded as listed securities. This fourth tranche is the first issue in the current financial year.
Gold has emerged as the best asset class in 2016 so far, giving 23 per cent return in India. Globally, exchange traded funds (ETFs) have seen very good demand, mostly from European investors.
The total response on day one couldn’t be known. The BSE got bids for 27,475g, worth Rs 8.57 crore in bonds. The NSE figures were not available. Banks and other institutions are also selling the bonds. NSE’s electronic mutual fund platform has also started offering subscription to sovereign gold bonds. A portal, NMF-II, has been made for distributors to place mutual fund (MF) transactions on behalf of clients. As of now, NMF-II is the only online MF platform offering sovereign gold bonds to investors.
The price closed 5.2 per cent lower on Monday, with over a kg worth traded on the BSE at Rs 3,250 a gramme,still at a premium to the physical market closing price of Rs 3,097 a gramme for 999-purity here. NSE bonds closed at Rs 3,186 a gramme, with 885g traded. Trading volume was thin, though double the usual.
Investors have put Rs 1,318 crore, equivalent to 4.9 tonnes of gold, into the first three tranches at the then prevailing prices. The first issue was at Rs 2,684 a gramme, which closed on the BSE at Rs 3,250. At the Zaveri Bazar spot market here, 999-purity closed on Monday at Rs 3,097 a gramme.
Also, the minimum investment, earlier two grammes, has now been reduced to one gramme to align these with the listed bond norms. Further, in the physical gold market, demand is weak. Only 23 tonnes of gold was imported in June, a big part of which is estimated to be for re-export. Since April, gold import has come down to 25-30 tonnes a month, against the usual 60-70 tonnes.
Surendra Mehta, secretary, India Bullion and Jewellers Association, says, “Why are gold ETFs needed now, when sovereign gold bonds are a much better option? There are 22 tonnes of idle gold with gold ETFs. The government must ask all gold ETFs to deposit idle gold under the GMS (its gold monetisation scheme) or allow them to lease this gold.”
“This will help make gold monetisation successful and the gold which is leased or put under GMS will earn more for investors and replace import demand. If such facilities are allowed to ETFs, they can earn more and give higher returns to their investors,” he added.
Gold bonds are looking attractive as they offer a return matching the movement in price, as well as 2.75 per cent annual interest on the amount invested. The bonds were launched last November, along with other schemes to curb import of gold. The bonds also enjoy a tax advantage — capital gains tax on redemption to an individual has been exempted. And, indexation benefits will be provided for long-term capital gains to any person on transfer of the bond.