₹1.7 lakh crore loss from Sovereign Gold Bonds — not due to markets, but policy failure.

SGBs were launched in 2015 to reduce gold imports by offering “paper gold,” assuming gold prices would stay flat. That assumption collapsed.

Gold rose from ₹2,500/gram to ₹8,624/gram (3.5x), turning SGBs into a massive unhedged liability for the government, as they were not fully backed by physical gold (not 1:1).

The government issued ~147 tonnes of SGBs (132 tonnes outstanding), creating a liability of ~₹1.2 trillion, while gold imports continued, customs duty hikes failed, and RBI itself kept buying gold.

Investors won with ~3x returns.

Policy lost.

Taxpayers pay.

Lesson: You can’t fight inflation, fear, or India’s love for gold with spreadsheets.

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