EBM News - Latest News, English News, News Headlines, Breaking News

Sovereign Gold Bond Scheme Opens Today: How to Buy Gold at Discounts, Should you Invest?

Sovereign Gold Bond Scheme: The central government’s Sovereign Gold Bond Scheme is set to open on November 29, Monday. The five-day window to buy digital gold during the eighth tranche of the offer in 2021-22 will close on Friday, December 3, the government has notified in a press release. The Sovereign Gold Bonds will be issued in four tranches from October 2021 to March 2022, the Reserve Bank Of India has said in a separate press note. In this scheme, the central bank issues bonds linked to the market price of gold on behalf of the government.  Introduced in 2015, the Sovereign Gold Bonds are government securities denominated in grams of gold.

Issue Price of Sovereign Gold Bond (SGB) Scheme 2021-22 – Series VIII

The issue price of the Sovereign Gold Bond has been fixed at Rs 4,791 for one gram, the finance ministry has said in a notification. In this case, one bond is equivalent to one gram of gold. While the price is fixed at Rs 4,791 for each gram, people who subscribe online and pay in a digital mode will have to pay Rs 50 less per gram of gold, the government said.

“The Government of India in consultation with the Reserve Bank of India has decided to allow discount of Rs 50 (Rupees Fifty only) per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be Rs 4,741 (Rupees Four thousand seven hundred forty one only) per gram of gold,” read a statement from the finance ministry.

Investment Limits

As per the RBI guidelines, Sovereign Gold Bonds can be used as collateral for loans. Any individual investor can invest a minimum of one gram with a maximum limit of subscription of 4 kilograms. Hindu Undivided Families can also buy up to 4 kgs of gold, which means 4,000 bonds, in each financial year. For trusts and other organisations, the limit is set at 20 kilograms.

Am I Eligible to Buy Sovereign Gold Bond this week?

As per the RBI, “Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.”

Minors, provided the application is made by his or her guardian, can also buy the bonds.

Where can I Buy these Bonds? 

Sovereign Gold Bonds can be bought through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Ltd. (CCIL), designated post offices and recognised stock exchanges like the Bombay Stock Exchange and the National Stock Exchange.

Should I Buy Sovereign Gold Bonds?

“The price for the Sovereign Gold Bond tranche-8 has been fixed at 4791/gm. The Sovereign Gold Bond is an effective way of taking exposure to gold,” said Nish Bhatt, founder and CEO of Millwood Kane International.

“After hitting a 9-month high earlier in the month, gold prices were trading in a narrow range for the past few sessions. The fears surrounding the new variant of virus has raised fresh concerns, leading to a softness in USD, pushing gold prices higher. But the improving economic scenario, inflation levels around the world, likely rate hikes to contain inflation is likely put pressure on gold,” he added.