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Gold is the best hedge for inflation. It is said that the price of 10 gms of Gold is the same as the monthly expense of an average middle class family. SGBs are the best way to invest in Gold as –

1. It gives 2.5% interest.
2. The price as the time of sale is the same as the market value of the Gold at that time
3. One doesn’t need to incur cost to store it and there is no risk of theft
4. They are tax effective – There is no capital Gains tax on redemption of these bonds
5. They are easy to trade and hence very Liquid.