There will be no more issues of Sovereign Gold Bonds. That's what Finance Minister Nirmala Sitharaman said at a press briefing after announcing the Union Budget. What does it entail for investors seeking a financial alternative to gold as a strategic asset class? Do they have to return to the spot gold or gold Exchange Traded Funds or Gold Mutual funds – all of which appear sub-optimal to the SGBs?When SGBs were introduced in 2015, everyone from the finance minister to portfolio managers to analysts hailed it as the greatest product innovation for Indians thirsting for gold. It had all the features of a blockbuster saving instrument: Sovereign guarantee (backed by the government), a price discount of 5%, exemption from tax on maturity if held for 8 years with early withdrawal facility from fifth year onwards, a sweetener of 2.75% interest per annum, later changed to 2.50% (akin to your bank paying you locker rent for storing your gold) and above all, an option to redeem at market price of gold on maturity.
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