When investing in gold, you have two viable options: Sovereign Gold Bonds and taking a Gold Loan. You can use both to leverage the value of gold, though the two are clearly and fundamentally different in application. Separating the basics would therefore help you know which you would prefer considering your investment strategy.

What are Sovereign Gold Bonds?

Sovereign Gold Bonds are an investment scheme sponsored by the government in which you can invest in gold without holding any actual gold. What happens is, you buy Bonds equivalent to the value of gold, and over time, those Bonds continue to earn interest amounts. That way, they become a safer and easier way of holding physical gold free from the problems associated with theft or storage concerns.

The attraction to Gold Loans

On the other hand, Gold Loans can be utilised by using your existing gold to pledge against a Loan. This would be very handy in case you needed to raise some money for short-term financial needs. There is always the option of borrowing money by pledging your gold, while retaining full ownership of your gold.

The first and most decisive reason why people choose to go for a Gold Loan is the amount that could be borrowed. This is where a Gold Loan calculator comes into the picture. Using a Gold Loan calculator, you can determine the right amount against the weight and value of the gold you possess. You can also search for the kind of interest rates and tenure applicable to the Loan, which would fit your repayment capacity to repay the said Loan.

Sovereign Gold Bonds vs Gold Loans: Which to choose?

If you are looking for a long-term investment that is low in risk, then perhaps the Sovereign Gold Bond might better fit your scope. Here, you receive a regular return through interest, and you reap from any appreciation in the price of gold. There are no storage issues, and the investment is backed by the government, which makes this, one of the slightly more secure investments.

However, if you require cash immediately and you possess gold, then maybe this Loan could be the answer you are looking for. You will be able to calculate how much you can borrow by using a Gold Loan calculator so that you need not sell one of your gold commodities. A Gold Loan is perfect for a person who needs money only temporarily without having to part with gold assets owned.

Conclusion

Now, your decision will depend directly on your financial situation. Sovereign Gold Bonds are best if you are a long-term accumulator of wealth. In case, you need liquidity immediately, then Gold Loans make for an excellent option.