Sovereign Gold Bond Scheme 2022: New issue open from today. Should you subscribe?

Sovereign Gold Bond Scheme 2022: The new issue of the government-backed Gold Bond Scheme has opened today and the scheme will be open for subscription till 26 August 2022. The issue price is fixed by the Reserve Bank of India (RBI) on behalf of the Centre. 5,197 per gram. The bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognized stock exchanges – NSE and BSE. The bond will be for a tenure of 8 years and the exit option after the 5th year will be exercised on the next interest payment dates.

According to market experts, one should subscribe to the second installment of Sovereign Gold Bond Scheme Because it provided an option to invest in gold while giving additional returns in the form of interest income. He said this is apt for investors as the outlook for gold price is positive in view of rising global inflation.

Should you subscribe to the new installment?

Advising gold investors to subscribe to the new tranche of Sovereign Gold Bond Scheme 2022, Sugandha Sachdeva, Vice President – Commodity & Currency Research, Religare Broking said, “The latest and second tranche of Sovereign Gold Bond Scheme 2022-23 will be available for subscription. It is open for five days from today and till August 26. SGB is a great option to invest in gold as it not only provides additional returns in the form of interest income, but also against default risk and issues like maintenance, security , and purity. So yes, SGB would be the right choice for investors who are looking for a stable and hassle-free investment in gold.”

Echoing Sugandha Sachdeva’s views, Megh Modi, Commodities and Currency Research Analyst at Prabhudas Lilladher said, “Gold is considered a hedge against inflation and demand for gold in India will remain high. Long term investors will buy gold whether it is physical or Sovereign Gold Bond. With geo-political concerns and inflation still not controlled across the globe, one can subscribe to the new tranche of Sovereign Gold Bond Scheme 2022.”

Benefits of Sovereign Gold Bond Scheme

Giving the ‘Subscribe’ tag to the Sovereign Gold Bond Scheme, Nirpendra Yadav, Senior Analyst – Commodity Research at Swastik Investmart listed the following benefits of the Gold Bond Scheme:

1]You will get 2.5 per cent interest rate every year;

2]No expenses or other fees like ETFs and mutual funds; And

3]Guaranteed by the Government of India.

“In addition to the above benefits, Sovereign Gold Bond prices are linked to gold prices, which most of the time rise on uncertainty, war, pandemic or any natural calamity. Hence investors get the benefit of gold prices along with interest on their investments,” said Nirpendra Yadav of Swastika Investmart.

“This is an opportune time to invest in Sovereign Gold Bonds, as the overall outlook for gold is positive as high inflationary pressures across the globe are acting as a major tailwind for the precious metal. In addition, the global economic slowdown And concerns about geopolitical risks remain. Gold in demand for its safe-haven position Even though concerns about a monetary tightening path from the US Fed could lead to short-term volatility in prices, US central banks will hike rates. Noting that Sugandha Sachdeva of Religare Broking said, “Its impact on economic growth which will bring down gold prices. Central bank gold purchases and ensuing festive demand will drive gold prices further, making it a great tool to diversify your portfolio for better risk-adjusted returns in the long run.”

On gold price outlook, Prabhudas Lilladher’s Megh Modi said, “MCX is placed on the overhead supply of gold 52,500, the yellow metal may fall below reach the region of 50,000 more 48,500 levels. It is likely to remain within its range in the next one year. from 48,500 52,500 levels. Important support for Comex Gold is placed at the $1,680 level per ounce. A breach of this level could lead the price towards the $1,560 level. It will remain below $1,700 for a few years and may remain in the range of $1,450 to $1,550.”

Sovereign Gold Bond Scheme Details

The minimum permissible investment limit in the Sovereign Gold Bond scheme is 1 gram of gold while the maximum membership limit is 4 kg for individuals, 4 kg for HUF and 20 kg per financial year (April-March) for trusts and similar entities.

The Central Government in consultation with the Reserve Bank of India has decided to exempt 50 per gram, less than the nominal value, to the investors applying online and the payment against the application is made through digital mode.

The bond is priced in Indian currency on the basis of simple average closing price of 999 purity gold published by India Bullion and Jewelers Association Limited for the last 3 working days of the week preceding the subscription period.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.

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