Gold sovereign bond price: Issue of gold sovereign bonds opened from today: should you subscribe?

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NEW DELHI: The eighth tranche of the 2021-22 Sovereign Gold Bond (SGB) program was opened for subscription on Monday. This problem arises against a backdrop of increased demand for investment metals due to increased market risks.

Those who intend to subscribe to the program can bid for a minimum of 1 gram of gold at Rs 4,791 / g per gram against Rs 4,732 per gram for the previous installment. There will be a discount of Rs 50 for investors who bid online. The issue ends Friday, December 3.

Investment in gold sovereign bonds has accelerated in recent months. However, the lack of clarity on how gold will perform over the next few months could prompt investors to remain cautious. If prices fall, it will be better to subscribe to a later tranche.

“After hitting a 9-month high earlier in the month, gold prices have been trading within a narrow range in recent sessions,” said Nish Bhatt, founder and CEO of Millwood Kane International, a investment advice. “Fears surrounding the new variant of the virus have raised new concerns, causing the USD to weaken, pushing gold prices higher. But improving the economic scenario, inflation levels around the world, likely rate hikes to contain inflation are likely to put pressure on gold. Going forward, with the US Fed meeting in December, the likely forecast for rates, economic data and dollar movement will guide gold prices in the short to medium term. ”

If you want to subscribe, you can do so through your bank. In addition, these bonds are also sold through the Stock Holding Corporation of India Limited (SHCIL), designated post offices, the National Stock Exchange and ESB, either directly or through agents.

Investors would earn 2.50 percent interest on the amount of the initial investment, which will take effect from the date of its issuance and will be payable every six months. In addition, they can also see capital gains at the time of redemption, in case the price of gold at the time of redemption is higher.

According to the Indian Bullion and Jewelers Association, the highest purity gold traded at Rs 48,466 per 10 grams on Friday evening. The price data published by the association forms the basis for the prices of SGBs.

SGBs, government securities denominated in grams of gold, are substitutes for holding physical gold. Investors must pay the issue price in cash and the bonds will be redeemed in cash at maturity. The bonds are issued by the RBI on behalf of the government.

SGB ​​is a preferred route by the government to convert all gold investments digitally, this will help keep the deficit under control and support the currency.

The term of the loan will be eight years with an exit option in the 5th, 6th and 7th year, to be exercised on the interest payment dates. In addition, the bonds will be tradable on the stock exchange within fifteen days of their issue. Although liquidity is generally low on the stock exchanges.

Among the advantages of subscribing to SGB are attractive interest with an opportunity for asset appreciation, the redemption being linked to the price of gold, elimination of risk and cost of storage, exemption from tax on capital gains if held to maturity and hassle-free holding as it eliminates the storage cost of physical gold.


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