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The subscription of the latest tranche of sovereign gold bonds ends today. The issue had opened on October 25. The issue price has been fixed at 4,761 per gram of gold. The issue price of the gold bonds will be 50 per gram less for those who subscribe online and pay through digital mode. The Reserve Bank of India will issue the bonds on behalf of the Government of India. In the futures market on MCX, gold is hovering around 47900 levels currently. 

“The gold bonds by the government have been a big success, as the government has raised over 32,000 crores since its inception in 2015. sovereign gold bonds are a superior option to invest in gold without having to worry about its storage cost, making charges in the case of gold jewelry. These bonds come with an advantage due to tax benefits and regular interest payout for the investors. The investment in SGBs has helped the government reduce the deficit, also formalized the investment in gold in the country," said Nish Bhatt, Founder & CEO, Millwood Kane International.

The Reserve Bank of India will issue the bonds on behalf of the Government of India. The price of bonds is fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Ltd for the last three working days of the week preceding the subscription period.

Gold rate risen in recent weeks and moving forward gold prices will be guided by the development from the trade talks between the US and China, the covid situation, and its impact on business activities and central banks' action on liquidity and rate hike front, he added. 

Gold bonds have a tenure of eight years with an exit option after fifth year to be exercised on the next interest payment dates.

The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value while the minimum permissible investment will be 1 gram of gold.

The 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 gold -- into financial savings.  (With Agency Inputs)

 

 

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