Sovereign Gold Bonds Latest News: Price announced at Rs 5,197/gram; Rs 50 discount on online purchase

Sovereign Gold Bonds Latest News: Sovereign Gold Bond (SGBs) 2022-23 Series II will be available for subscription from Monday, 22 August 2022. The issue closes on 26 August. The date of issuance is 30 August. The price of 1 gram of gold is Rs 5,197.

The nominal value of the bond is based on the simple average closing price published by the India Bullion and Jewellers Association Ltd (IBJA) for gold of 999 purity of the last three business days of the week preceeding the subscription period. In this case it is 17-19 August.

 Those applying for SGBs online will get a discount of Rs 50 per gram so the price is Rs 5,147.

Zee Business Expert Jitendra Solanki gives these insightful tips to maximise the returns on SGBs. 

Expert Jitendra Solanki’s top tips for SGB investment  

Solanki said that SGBs is a surely a good investment option for all those who are willing to invest in Gold. He said that one gets an additional rate of interest above what capital appreciation one will get from gold.  

This instrument has a benefit of capital gains tax exemption if invested for 8 years. While the investors have an option to exit after five years, they will not have the benefit of tax exemption in case if the decide to exit in 5 years. A 8-year horizon should be taken while investing in SGBs. He says a strict NO for premature REDEMPTION.   

What to keep in Mind?  

The exert said that investors should know why they are thinking to invest when making an entry as entry point is crucial. Over the last 8-10 years the prices have appreciated. Investors should buy only that much which does not disturb the balance of the portfolio. A 5-10 per cent allocation in Gold is considered good, he said.  

SGBs are government securities denominated in grams of gold and 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 Government of India.   

The payment for the Bonds will be through cash payment (up to a maximum of Rs 20,000) or demand draft or cheque or electronic banking. The issue price of the Gold Bonds will be Rs 50 per gram less for those who subscribe online and pay through digital mode.   

The Bonds will be 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 interest payment dates.   

SGB are restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions. The minimum permissible investment is 1 gram of gold while the maximum limit for subscription is 4 kg for individual, 4 kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time.