Showing posts from January, 2023

Sovereign gold bonds are naked calls written by the government

The Reserve Bank of India (RBI) issues sovereign gold bonds (SGBs). These bonds are denominated in grams of gold at current prices. I believe SGBs are the best way for individuals to invest in gold. They offer a 2.5% return each year on the invested amount. At redemption after 8 years, the bondholder will receive the equivalent price of gold in grams. Additionally, SGBs are exempt from capital gains. No other gold investment scheme can compare. In fact, regular gold-indexed funds charge management fees. From the government's perspective, SGBs are similar to "naked calls". No matter what the future value of gold is, the government will give the bondholder that price at redemption. While the government pays a 2.5% annual coupon, it also writes this "naked call" on top, due to the price promise. Is the government losing money? Let's examine. The government can raise money by issuing regular sovereign bonds, which it usually does. Currently, these need to pay ar

Understanding semiconductors industry through 10 minutes with chatGPT

This is the chat transcript with chatGPT, the latest large language AI model that's shaking the world. The chat lasted less than 10 minutes. I haven't edited any of the answers. I tried gaining a basic understanding of semiconductors industry and some policymaking aspects around it.  TK:  what is the size of semiconductors market in the world? chatGPT: The size of the semiconductor market in the world varies from year to year, but it is generally considered to be a large and rapidly growing market. According to a report from the World Semiconductor Trade Statistics (WSTS) organization, the global semiconductor market reached $529 billion in revenue in 2020. This represents a decline of 10.5% compared to 2019, due to the impact of the COVID-19 pandemic on global economic activity. However, it is expected to grow in the coming years as well. TK: How much of market does the semiconductors support downstream? For example, semiconductors are used in mobile phones, computers, applian