Sovereign Gold Bonds

Everything you should know about Sovereign Gold Bonds ( SGB )

Sovereign Gold Bonds 2023 - SGB

Sovereign Gold Bonds (SGBs) are the perfect alternative to investment in physical gold. With these bonds, you can enjoy capital appreciation and also earn interest every year. These bonds, issued by the Government of India, also eliminate several risks associated with physical gold. Reserve Bank of India issues the bonds on behalf of the Government of India. The rate of SGB will be declare by RBI before every new tranche by issuing a press release.

RBI will issue Press Release stating issue price of the Bond before new Issue. Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited (IBJA) for the last 3 business days of the week preceding the subscription period.

Why government issues Sovereign Gold Bond scheme?

India has long been a nation where people have been attracted to gold as an asset class. Indian households are estimated to be holding nearly $1 trillion worth of gold in the form of bars and jewellery. India is the largest importer of gold, which mainly caters to the demand of jewellery industry and investors. In volume terms, the country imports 800-900 tonnes of gold annually. To reduce import of gold, government launched SGB in November 2015 under Gold Monetization Scheme.

Investors also facing lot of problems in keeping gold in physical form. They face issues like purity of gold, security i.e. risk of theft, making charges and tax associated during the purchase. This way investors will receive gold in demat form or as certificate with sovereign guarantee.

Why should you buy sovereign gold bond?

The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

Sovereign Gold Bond Issue Dates →

Benefits of Sovereign Gold Bonds

  • Interest Rate - Extra 2.5% interest paid semi annually.
  • No making charges compared to coins and jewellery.
  • Pledge and get loan against SGB online easily.
  • Negligible or zero maintenance cost.
  • Safety No default risk as it issued by Government of India.
  • Convenience of buying gold online.
  • Provide all the benefits of physical gold in terms of investment perspective.
Compare SGB vs Physical Gold vs ETF vs MF →

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