Buy Sovereign Gold Bonds from Sep 11: 1g at Rs 5,873, Online & Offline Investment

Sovereign Gold Bond Scheme (SGBs) 2023-24

The second series of the Sovereign Gold Bond Scheme for 2023-24 is set to commence from Monday, September 11. It will run until September 15, during which you can make investments. At this time, the price of gold is fixed at ₹5,923 per gram. You can participate in both online and offline applications.

Online Application Perk

By applying online, you can avail a ₹50 discount, meaning you will incur a cost of ₹5,873 per gram. In the Sovereign Gold Bond, you are investing in 24 karat, which translates to 99.9% pure gold.

What is Sovereign Gold Bond Scheme (SGBs)?

Sovereign Gold Bonds are government bonds that can be converted into physical gold. The bond’s value is equivalent to a certain amount of gold. For example, if a bond represents five grams of gold, its value will be equivalent to the current price of five grams of gold. These bonds are issued by the Reserve Bank of India (RBI).

24 Karat Gold

In Sovereign Gold Bonds, you are investing in 24 karat gold, which translates to 99.9% pure gold. SGBs offer an annual interest rate of 2.50% on your investment. Additionally, you can avail loans against these bonds if the need arises.

The bond’s price is determined based on the Indian Bullion and Jewellers Association Ltd (IBJA) published rates. The subscription period usually lasts for the last three days of each fortnight.

No Worries About Purity and Security

When it comes to Sovereign Gold Bonds, there’s no need to worry about purity. The price of gold bonds is linked to the 24 karat purity rate published by the Indian Bullion and Jewellers Association (IBJA), as per the National Stock Exchange (NSE). These bonds are stored in a dematerialized form, making them highly secure and incurring no additional costs.

You Can Invest in More Than 4 Kilograms of Gold Through SGBs

Through SGBs, individuals can invest in as little as 1 gram and up to more than 4 kilograms of gold. The 4-kilogram limit applies to a single holder in the case of joint holdings. Trusts, however, have a maximum limit of 20 kilograms for purchase.

Tax Payment Required After 8 Years

The Sovereign Gold Bond has a maturity period of 8 years. There is no tax on the gains when the investment matures. However, if you decide to redeem your investment after 5 years, you will be subject to a 20.80% tax rate on the long-term capital gains (LTCG).

You Can Also Invest Offline

The RBI provides various options for investing in SGBs. You can invest through bank branches, post offices, stock exchanges, and the Stock Holding Corporation of India Ltd (SHCIL). Investors will need to fill out an application form for investment. Afterward, the money will be debited from your account, and the bonds will be transferred to your demat account. Having a PAN is mandatory for investment. These bonds are tradable on recognized stock exchanges like NSE and BSE.

Offering Approximately 120% Returns in 7 Years

When Sovereign Gold Bond schemes were launched in 2015-16, the price for one gram was Rs. 2,684. A discount of Rs. 50 was offered, bringing the effective price to Rs. 2,634. The current price for the latest series of Sovereign Gold Bonds is Rs. 5,923. With the discount of Rs. 50, the effective price now stands at Rs. 5,873. In this way, this scheme has provided approximately 120% returns in the last 7 years.

How Will the Investment Fare?

Ajay Kedia, Director of Kedia Commodities, suggests that long-term investments in gold tend to perform well as the impact of volatility is less, and you can reap substantial returns. Gold is expected to provide returns of around 3 to 5 years in the coming years. It can reach Rs. 65,000 per 10 grams in a year and potentially touch Rs. 75,000 by June 2025.