The government has decided to issue two tranches of sovereign gold bonds (SGBs) during the first half of the current financial year. The first tranche will be available for subscription from June 19-23 and the second tranche will open from September 11-15
The price for Series-I 2023-24 is fixed at ₹5,926/gm. Investment in Sovereign Gold Bonds has helped the RBI raise over ₹30,000 cr since its inception in November 2015, said Nish Bhatt, Founder & CEO, of Millwood Kane International.
The opening of the Sovereign Gold Bond scheme for subscription by retail investors presents a unique opportunity to invest in gold as an asset class. With the option to purchase as little as one gram of gold and a maximum of four kilos, investors can participate in this regulated and secured investment avenue. “The dematerialized form of the bonds allows for convenient holding in a demat account, eliminating concerns regarding impurities and deductions often associated with physical gold. The securitization of these bonds against 99.9% pure gold held by the Reserve Bank of India ensures that investors will receive the total value of the gold upon redemption in the eighth year, without any deductions,” said Abhijit Roy, CEO, GoldenPi.
Should you invest?
Investment in paper, digital gold provides high liquidity, eliminates storage costs, and is easier to sell than physical gold. The attractive proposition extends further, as retail investors stand to gain a 2.5% annual interest on their investment until the maturity of the bonds. Additionally, there is a discount of ₹50 on every gram of gold that an applicant applies thru online mode and pays digitally (Netbanking, NEFT, UPI etc.). “Investment in SGBs comes with an interest coupon payable semi-annually. “SGB has posted double-digit gains since its inception in 2015,” said Nish Bhatt.
Advantages of SGB
The liquidity of these bonds is facilitated by their listing on exchanges, allowing investors to redeem them from the fifth year onwards. One of the most significant advantages of this asset class is the complete exemption from taxation on capital gains realized upon maturity after eight years.
Should retail investors go for SGB?
According to Abhijit Roy, CEO, GoldenPi, this scheme offers retail investors a secure, interest-bearing investment in gold, allowing them to diversify their portfolios and benefit from the long-term potential of this precious metal. With its ease of access, purity assurance, interest earnings, and tax benefits, the Sovereign Gold Bond scheme presents an enticing opportunity for investors looking to harness the potential of gold as a long-term investment.
Where can investors buy SGB?
-Scheduled Commercial banks (except Small Finance Banks, Payment Banks, and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL),
-Clearing Corporation of India Limited (CCIL),
-Designated post offices (as may be notified) and
-Recognised stock exchanges either directly or through agents.
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Updated: 17 Jun 2023, 01:49 PM IST