New issue of Sovereign gold bond scheme opens tomorrow: Key things to know

The Sovereign Gold Bond Scheme 2021-22 – Series X will be open for subscription for five days from February 28 to March 4.

“The nominal value of the bond…works out to ₹5,109,” the central bank said in a statement.

Investing in SGB is a better and less hectic option. “ The price for the Sovereign Gold Bond tranche-10 has been fixed at 5109/gm. Moving investment from physical gold to digital/paper gold has been a big success for the government via the SGB, wherein it has raised over ₹32,000 crores since its inception in 2015. Investing in paper gold (SGBs) is a better and less hectic option as there is no storage cost, making charges in the case of gold jewellery,” said Nish Bhatt, Founder & CEO, Millwood Kane International – an Investment consulting firm.

Discount if you apply online

The Government of India, in consultation with the RBI, has decided to offer a discount of ₹50 per gram to those investors applying online and the payment against the application is made through digital mode.

“For such investors, the issue price of Gold Bond will be ₹5,059 per gram of gold,” RBI said.

The bonds are denominated in multiples of gram (s) of gold with a basic unit of 1 gram. The tenor of the bond will be for a period of 8 years with exit option after 5th year to be exercised on the next interest payment dates.

Gold prices have rallied to more than a year high due to the geopolitical tensions. Historically, gold has attracted investment in times of uncertainty due to its safe-haven nature. “The situation in Ukraine has also led to a spike in crude prices. A rally in oil prices put pressure on the INR, thereby making gold more costly. Currently, gold is supported by international as well as local developments,” Nish Bhatt said.

Moving forward, the development in Ukraine and the Fed action will provide direction to most asset classes. But a higher crude price and inflation in India, subsequent pressure on INR will continue to support gold prices in the short to medium term, he added.

SGB: Minimum and maximum limit

Minimum permissible investment is 1 gram of gold. The maximum limit of subscription is 4 kg for individuals, 4 Kg for HUFs and 20 Kg for trusts and similar entities per fiscal (April-March).