SGBS : ET's STRANGE LOGIC

STRANGE LOGIC

This refers to the report “Govt’s Gold Bond Scheme May Lose Sheen if Metal Declines” (Economic Times, November 6, 2015). The presumption that investing public will shy away, if gold price falls marginally when the gold bonds are on tap does not stand to logic. One who has decided to invest in bonds which will fetch an annual return of 2.75 per cent per annum will not opt for a ‘dead’ investment in solid gold, as his perspective is long term. If gold bond has to be priced with reference to ‘prevailing rate’, the retail outlets will have to be equipped for the purpose with an online information system, which is not in place as of now. And, taking the argument further, pricing of IPOs which may remain on tap for more than a day, may have to be linked to the rise and fall of Sensex or Nifty!
The success or failure of Sovereign Gold Bond Scheme will be dependent on the level of awareness RBI and GOI are able to create among savers about the reliability of the instrument as an option worth considering in view of the value addition on investment due to interest credit, which does not happen if one buys and keeps gold bars in lockers.

M G WARRIER, Mumbai

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