Tipping Point: Should you buy gold bonds on exchanges?

Should you buy gold bonds on exchanges?

While there is no Sovereign Gold Bond (SGB) issue available right now, you can buy older ones on the stock exchanges at attractive discounts ranging from 5.9-7 per cent. SGBs sell at a discount on the exchanges due to lack of liquidity. While the prices seem attractive, the traded volumes of SGBs are quite low. If you plan to buy SGBs on an exchange, avoid taking tactical exposure to benefit from arbitrage opportunities, as you might also need to sell them at a discount. Buy these bonds in the secondary market only if you want to hold them till maturity. Only then will you be able to realise profits.