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Business News/ Money / Personal Finance/  Sovereign gold bond's 9th tranche closes for subscription today: 10 points
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Sovereign gold bond's 9th tranche closes for subscription today: 10 points

The additional interest component and capital gains tax exemption, if bonds are held till maturity, make sovereign gold bonds an attractive vehicle to invest in the precious metal, say analysts

Analysts say that sovereign gold bonds are a good way to invest in gold for the long term.Premium
Analysts say that sovereign gold bonds are a good way to invest in gold for the long term.

The ninth tranche of sovereign gold bonds of this fiscal, which opened for subscription on Monday, closes today. The issue price for Sovereign Gold Bond Scheme 2020-21-Series IX has been fixed at 5,000 per gram of gold. A discount of 50 per gram will be available for investors applying online and makingthe payment against the application is made through digital mode. For such investors, the issue price of the gold bond will be 4,950 per gram of gold.

Here are 10 things to know:

1) Analysts say that sovereign gold bonds are a good way to invest in gold for the long term. "One can take long term exposure to gold through sovereign gold bonds, that can be added to one’s portfolio for diversification as well as for wealth creation. The additional interest component and capital gains tax exemption, if bonds are held till maturity, ensures higher returns through SGBs," Religare Broking said in a note.

2) Gold bonds offer an annual interest rate of 2.50% to investors.

3) The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram and the minimum permissible investment is 1 gram.

4) Gold bonds have a maturity period of eight years with an exit option after fifth year. The redemption price is based on the then prevailing price of gold.

5) Capital gains, if any, at maturity is tax-free. This is an exclusive benefit available on gold bonds.

6) The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram and the minimum permissible investment is 1 gram.

7) Sovereign gold bonds are issued by Reserve Bank India on behalf of the Government of India.

8) The issue price for previous Series VIII of gold bonds, that was open for subscription from November 9 to 13, 2020, was 5,177 per gram of gold.

9) Gold had given a return of over 25% in 2020. Analysts say that low interest rates and prospects of uneven global economic recovery could support gold prices despite covid vaccine rollouts.

10) In futures markets, on MCX, gold prices are currently hovering around 50,000 per 10 gram. In August, gold had hit a high of 56,200 in futures markets.


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Published: 01 Jan 2021, 11:31 AM IST
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