Buy Sovereign Gold Bonds as ideal Akshaya Tritiya investment amidst global economic uncertainty: Experts

New Delhi [India], May 10 : On Akshaya Tritiya, one of the auspicious days in the Hindu calendar, celebrated across India on Friday with traditional fervour and enthusiasm turns the eyes of many to the price of gold.
In Delhi, the anticipation for this year's Akshaya Tritiya has been heightened as gold prices surge. On Friday, the price of gold stood at Rs 71,240 per 10 grams of 24k gold, setting the stage for an eventful day of gold purchases and celebrations.
Comparing this to the price on April 22, 2023, when Akshaya Tritiya gold was priced at Rs 59,845 for 10 grams of 24k gold, there has been a noticeable increase.
Kishore Narne, Commodity head, and executive director, Motilal Oswal group said, "As we embark on the new financial year, commencing with the auspicious occasion of Akshaya Tritiya, both Gold and Silver have shown significant gains, with Gold up by 13 per cent and Silver by 11 per cent Year-to-Date (YTD). Recent increases in gold prices have been driven primarily by geopolitical tensions and Central Bank purchases."
He added, "Coin and bar demand saw a slight uptick last quarter, with a 3 per cent gain, while jewellery demand experienced a slight decline at -2 per cent. Central banks notably intensified their gold purchases, setting a new record for the first quarter, led by Turkey, China, and India."
This day, also known as Akti or Akha Teej, holds great significance for Hindus and Jains, symbolizing prosperity, wealth, and new beginnings. The festival falls on the third lunar day of the bright half of the Indian month of Vaishakha (April-May).
Narne acknowledges that while there have been occasional price corrections in the gold market, the overall trend has been upward.
He said, "Comparing returns over the past 15 years for Akshaya Tritiya, gold has demonstrated a 10 per cent Compound Annual Growth Rate (CAGR). While occasional price corrections have occurred, overall, the upward trajectory in prices has remained consistent and steady. Various investment platforms cater to market participants based on their risk profiles."
One of the highlights of Akshaya Tritiya is the tradition of buying gold, as it is believed that any investment or purchase made on this day will bring prosperity and good fortune.
Gold shops witnessed a surge in customers as people queued up to buy jewellery, coins, and other gold items. Jewellers across the country offered special discounts and schemes to attract buyers.
Buying gold jewellery is one of the most traditional ways to invest in gold on Akshaya Tritiya. People often purchase gold ornaments, such as necklaces, earrings, bangles, and rings, as they serve both as a form of investment and adornment.
Kishore Narne recommended investing in Sovereign Gold Bonds (SGBs), saying, "For a longer-term perspective, investing in Sovereign Gold Bonds (SGBs) is recommended, offering both the opportunity to capitalize on gold price appreciation and an additional 2.5 per cent interest annually for investors."
He added, "Other avenues for investment include Exchange-Traded Funds (ETFs), which have become increasingly popular, as well as, Digital Gold, and physical bars and coins. For short-term traders, derivatives on MCX also present a viable option."
Gold coins and bars are popular choices for investment purposes. They are available in various weights and purities and can be easily bought from jewellers, banks, or authorized dealers. Many people buy gold coins or bars on Akshaya Tritiya with the belief that it will bring prosperity and good fortune.
Gold ETFs (Exchange-Traded Funds) are financial instruments that track the price of gold and are traded on stock exchanges. Investing in Gold ETFs allows investors to gain exposure to gold prices without physically owning the metal. On Akshaya Tritiya, investors can buy Gold ETF units through their demat accounts.
Gold mutual funds invest in various forms of gold securities, including ETFs, mining companies, and gold bullion. Investors can invest in gold mutual funds through lump sum investments or systematic investment plans (SIPs).
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They offer an alternative to owning physical gold and provide investors with an opportunity to earn interest along with the potential for capital appreciation. SGBs can be bought from banks and designated post offices during specific issuance periods.
Digital gold platforms allow investors to buy gold in small denominations online. Investors can purchase digital gold through mobile apps or websites, which hold the equivalent of physical gold in vaults on behalf of investors. This option provides convenience and accessibility for small-scale investors.
Market expert Ajay Bagga points out the massive amount of gold held by Indian households and suggests that Sovereign Gold Bonds offer both interest income and potential price appreciation.
Bagga also notes the fiscal deficits and expanded central bank balance sheets globally, which contribute to gold's appeal as a safe-haven asset.
He emphasized the significant holdings of gold by Indian households, stating, "Indian households are estimated to be holding 27000 tons of Gold. This Akshaya Trittya buys some Sovereign Gold Bonds which give a small interest as well as the gold price appreciation. With the number of fiscal deficits and elevated central bank balance sheets,
He added, "Gold is a favored asset class. Central banks globally have been buying over 1000 tonnes of Gold for the last two years each. Chinese consumers have been rotating to monthly gold buying given the underperformance of Chinese stocks and real estate. Have a 5 per cent to 10 per cent exposure to Gold in your portfolio. As the Fed and other banks cut rates, Gold should rise further."
When it comes to buying gold jewelry, investors suggest looking for Hallmark before the purchase.
Hallmark gold refers to gold jewelry that has been certified by an authorized agency for its purity and quality. The hallmark is a stamp or seal placed on the jewelry by the Bureau of Indian Standards (BIS) or other recognized certifying authorities.
Hallmark gold ensures that the jewelry is made of pure gold and meets the specified standards of purity. The hallmark indicates the percentage of gold content in the jewelry, making it easier for buyers to assess its quality.
In addition to purity, hallmark jewelry also ensures quality in terms of craftsmanship and design. The hallmark certifies that the jewelry has been manufactured using standardized processes, ensuring durability and longevity.
Buying hallmark gold jewelry ensures compliance with legal standards and regulations. It assures buyers that they are purchasing genuine gold and protects them from counterfeit or substandard products.
Hallmark gold jewelry holds its value over time due to its purity and quality. It can serve as a reliable investment, offering liquidity and the potential for appreciation in value along with the gold market.
The hallmark stamp on gold jewelry makes it easy to identify the purity and authenticity of the metal. Buyers can trust the certification provided by the hallmark and make informed decisions while purchasing gold.
Hallmark gold jewelry typically fetches better prices when sold or exchanged due to its recognized purity and quality. Whether selling to a jeweler or through resale platforms, hallmark jewelry holds its value well in the market.