India Ratings and Research (Ind-Ra) says sovereign gold bond scheme is an attractive product and may address the pure investment demand for gold.
“Gold sovereign bonds may triumph over other comparable products in the market such as gold exchange traded funds and physical bars, and can lead to a reduction in India's current account deficit.
Also, gold sovereign bonds are easy to implement relative to the gold monetisation scheme,” adds Ind-Ra.
“Some of the pros of the sovereign gold bond scheme include, that a successful launch of this product may ensure that physical gold is used mostly for manufacturing jewellery and sovereign gold bond for investments.
Investors of gold bars or coins may find gold sovereign bonds a better investment than holding a physical stock because it will offer the benefit of gold without any handling and storage costs,” says Ind-Ra.
“The cons of the scheme are that the sovereign gold bonds are beneficial only if it is bought for investment purposes,” adds Ind-Ra.
The Government has not yet set the interest rate on this scheme.