India has a unique financial instrument known as Sovereign Gold Bonds (SGBs) where the Government pays you 2.5% for buying these SGBs as a measure to wean off the Indian habits of perpetually buying physical gold.
The investors get gold returns (capital appreciation) + 2.5% annually for investing in these bonds instead of physically buying gold. However, the one identified downside is that these bonds trades are illiquid and have a lock-in period of 5years.
Here in the picture we see a comparative analysis between the returns of SGBs Vs Nifty.
Equities as a financial instrument are more risky and also more volatile than gold.
Best,
Himalay Bhatia
