Home >Markets >Commodities >Sovereign gold bonds open for subscription. Should you invest?

The fourth tranche of sovereign gold bond of this fiscal opened for subscription today. The issue price has been fixed at 4,807 per gram of gold while those who apply and invest online get a discount of 50 per gram. Sovereign Gold Bond Scheme 2021-22 - Series IV or the fourth tranche closes for subscription on Friday (July 16th). Gold bonds offer an annual interest rate of 2.50% to investors.

Here are 10 things to know about the latest tranche of sovereign gold bond scheme:

1) Nish Bhatt, CEO of Millwood Kane International, says: “ The investment in non-physical gold, via digital or paper gold, is picking up pace. The high interest is on account of the recent firmness in the prices of gold in the past few weeks."

2) A total of 25,702 crore has been raised through the sovereign gold bond scheme till end-March 2021 since its inception in 2015.

3) "The government on its part has been continuously trying to move investment in gold from physical to digital/ paper gold to keep a check on the currency and larger fiscal deficit. Investment in sovereign gold bond is a superior alternative to physical gold. Investment in sovereign gold bond saves the cost of buying, storing, and selling the physical gold bar or coins," he added.

4) The government had earlier announced it will issue the Sovereign Gold Bond (SGB) in six tranches from May 2021 to September 2021. The RBI issues the bonds on behalf of the Government of India.

5) Sovereign gold bond scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings -- used for the purchase of the yellow metal -- into financial savings.

6) The issue price of the bond is fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last three working days of the week preceding the subscription period.

7) The bonds are denominated in multiples of gram (s) of gold with a basic unit of 1 gram. Minimum permissible investment is 1 gram of gold.

8) The tenor of the sovereign gold bond is 8 years with exit option after 5th year.

9) The redemption price is based on the then prevailing price of gold.

10) Capital gains, if any, at maturity is tax-free. This is an exclusive benefit available on gold bonds. (With Agency Inputs)

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