Should you buy Sovereign Gold Bonds?

The latest series of Sovereign Gold Bonds (SGBs) is open for subscription and you can buy them until Friday, January 17. Most banks let you buy the bond online using their internet banking facility. Otherwise, they can also be bought from the stock exchange or the post-office. Though the bonds are priced at Rs 4,016 per gram, buying them online makes you eligible for an instant discount of Rs 50 per gram. While Indians have had a love affair with gold that spans generations, the shiny metal has also caught the fancy of many investors on account of the 21 per cent returns it has delivered in the last one year. So does that make SGBs an attractive investment proposition? Well, before we talk specifically about SGBs, let's first look at gold as an investment alternative. It may have given super returns in the last year, but its long-term performance isn't all that glittering. Look at the graph below which compares the returns of gold funds with those of equity multi-cap funds across different time periods. As you can see, equity beats gold handsomely over longer time frames. Not only do the retur