Sovereign Gold Bond subscription ends today. Who should buy the new tranche of SGB?

The subscription to the latest tranche of sovereign gold bonds ends today. The issue had opened on September 11. The issue price has been fixed at 5,923 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 price of bonds is fixed on the basis of a simple average of the 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.

What are SGBs?

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by the Reserve Bank on behalf of the Government of India.

“We anticipate immense potential benefits from Sovereign Gold Bond Tranche in FY24, offering a secure avenue for investors seeking exposure to gold. Gold is expected to outperform most asset classes due to the anticipated slowdown in China, and other major economies including the US. This will drive high alpha-seeking investors to alternative investments and safer avenues like gold,” said Colin Shah, MD, Kama Jewelry.

According to various analyst estimates Gold is expected to rise by more than 10% GAGR up to the year 2026. Considering these factors, we expect the 2023-24 Series II gold bonds to deliver substantially above-average returns of more than 20% in the long term, added Colin Shah

Anuj Gupta, Head — Commodity & Currency at HDFC Securities said an investor will get an additional 2.5% annual interest on one’s money on absolute value of one’s investment. So, one should apply for this RBI-backed gold investment scheme.

SGB is one of the best investment options for investors aiming for long-term capital growth. “The latest Sovereign Gold Bonds Series II fixed at 5873/gm, a 3 discount from previous tranches, will be ideal for investors willing to hold on to their investment for at least 5 years,” said Nish Bhatt, Founder & CEO, Millwood Kane International.

So investors opting for SGBs should have a long-term investment horizon to maximize their benefits, added Nish Bhatt.

SGB redemption

On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on a simple average of the closing price of gold of 999 purity of the previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited. Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.



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Updated: 15 Sep 2023, 01:19 PM IST

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