Sovereign Gold Bond scheme kicks off: Should you subscribe?

NEW DELHI: The seventh tranche of Sovereign Gold Bond Scheme 2021-22 opened for subscription today. The Ministry of Finance has fixed the issue price for the scheme at Rs 4,765 per gram.

The Sovereign Gold Bond Scheme 2021-22 – Series VII will remain open for subscription for next five days as it can be subscribed till Friday, October 29.

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 of India on behalf of the Government of India. As the SGB is a government-backed instrument, SGB offers many benefits, including annual interest, tax benefits and easy-to-store option.

The government also provides a discount of Rs 50 per gram on the nominal value to those investors applying online and where the payment against the application is made through digital mode.

As per the Reserve Bank of India, the issue price of gold bonds will be Rs 4,715 per gram. According to the notification, the settlement date has been fixed as November 2, 2021.

Anuj Gupta, Vice President-Commodities, IIFL Securities, believes that it is again a chance to invest in gold in this festive season as the yellow metal is appreciating. Inflationary pressure supports gold and prices of the yellow metal may increase further, he said.

“We are advocating investors to subscribe to this series of SGB due to lower rates and expectations of good returns in the coming time,” he added. “We are expecting that gold may test $2,100 levels till next Diwali in 2022.”

Interested investors can bid for a minimum of one gram. Individual investors or HUFs can bid for a maximum of 4 kilograms of digital gold. Trust and similar entities can bid for 20 kilograms at max.

The bonds are sold through banks (except small finance banks and payment banks), Stock Holding Corporation of India (SHCIL), designated post offices, and recognised stock exchanges- National Stock Exchange of India Limited and BSE.