It is good to include Gold as an asset class in your portfolio because of two major factors highlighted below – 

• It serves as a hedge against inflation – As a value storage vehicle, gold has managed to do well over time. Inflation can erode the spending power of a dollar, but gold can help you hedge against that loss of value. Gold prices often move opposite to the dollar, so if the greenback weakens, gold is likely to strengthen.

• Diversification – Gold often moves opposite to the stock market. So, if the stock market drops, gold often heads higher. If you want to add some balance to your portfolio, gold can be one way to do it by diversifying your assets in a way that can partially protect you from a market event.

One rule of thumb is to limit gold to no more than 5 to 10 percent of your portfolio depending on your situation and your risk tolerance.

One way to invest in Gold is through Sovereign Gold bonds. These are government securities denominated in grams of gold. They are issued by the Reserve Bank of India.

Features of Sovereign Gold Bonds:

1. Eligible investors – Any resident individual including HUFs, trusts, universities, and charitable trusts can buy Sovereign gold bonds. This bond can also be purchased by a guardian or parent on behalf of a minor. But, a non-resident or ordinarily non-resident of India cannot buy a Sovereign gold bond. 
2. Minimum & Maximum investment  – Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March).
3. Tenor – The holding period of the Bonds is for 8 years with an option to exit after the 5th year.
4. Returns – Along with price appreciation, investors will earn an interest of 2.5% per annum payable in half yearly intervals.
5. Safety & Guarantee – These are Sovereign backed instruments which guarantees safety. Further, these securities are eligible to be used as collateral for loans.
6. Taxation – 
7. The capital gains tax arising on redemption of the Bonds to an individual has been exempted if held till maturity.
8. Else, the Long-Term capital Gains tax will be payable at 20% after indexation. 
9. Short Term Capital Gains (less than 36 months) will be payable at the marginal tax rate. Interest on Bonds will be taxable as per the provisions of the Income Tax Act.

The Reserve Bank of India has announced the issue dates for the Sovereign Gold bond scheme for 2020-21. In April, the government had issued the Series 1 tranche of the Gold bonds and the latest one comes at a time when gold is attracting strong investment demand. Below is the calendar for the upcoming Sovereign Gold Bonds issuance:

Investors can buy these bonds through designated scheduled commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited, and designated post offices. One can also buy these bonds through National Stock Exchange of India Limited and BSE Limited.

It would be best to get in touch with a Financial Advisor who can guide you to invest in these Bonds based on your goals, risk profile and asset allocation.