Those who haven’t subscribed yet, this is the last chance in 2020 to subscribe for the sovereign gold bond scheme 2020-21. Doors opened for the subscription of sovereign gold bond series 6, and here are the things you need to know about it.
The last tranche of the sovereign gold bond opened on August 31 and will be available until Friday for investors to subscribe. In 2020, the government announced to issue sovereign gold bonds as a part of its sovereign gold bond scheme 2020-21 in six installments during the first six months of the year. Investors already subscribed to the previous five installments.
Sovereign gold bonds are available in multiples of 1 gram. Investors can invest for a minimum value of 1 gram of gold for Rs 5,117 per gram. The maximum permissible amount for individuals is 4 kgs of gold, while trusts and universities can subscribe for up to 20 kgs.
The gold prices have seen some unexpected rise and fall in recent times. At one point, the gold price in the retail market crossed the Rs 50,000 mark for 10 grams. As the number of COVID-19 cases is surging in the country, the Indian economy forecasts are getting gloomier, which the experts believe is a reason that is contributing to the unprecedented rise in gold prices in India.
India’s demand for gold in one of the highest in the world, second only to China. After almost nine years, gold prices rose so drastically in the domestic market. A volatile market, a weakened dollar, and reducing interest have culminated in an increased appetite for gold.
In the time of market volatility, gold often performs better against other asset classes. It is the same situation now. Not only in India, but the gold price is rising in the global market as well. Gold price is rising globally because of weak market trends. Investors are looking for a safe-haven investment option, which pushed gold prices to a record high in nine years.
Sovereign gold bonds are a good investment option for investors who want to capitalise from rising gold prices in the future but don’t want the hassle of investing in physical gold. The Indian government introduced gold bonds in 2015 as a superior alternative to investing in the yellow metal. Moreover, it also helped the government curb the rising demand for imported gold in the market.
Since November 2015, when gold bonds were first introduced, RBI has issued thirty-seven tranches of SBG schemes, raising a total capital of Rs 9,652.78 crore in selling 30.98 tonnes in paper gold.
The gold bond price is calculated on a simple average of the closing prices for gold of 999 purity for three business days before the date of the issue. Based on this formula, sovereign gold bond series 6 will be available at Rs 5,117 per gram. Investors applying through the online platform will receive an additional discount of Rs 50. For those investors, the bond price will be Rs 5,067.
To wrap it up all, the SGB scheme is a good alternative to invest in gold for a diversified investment portfolio. Sovereign gold bond scheme 2020-21 issued in six tranches. If the gold price continues to rise, you can expect a good return after eight years when the bonds will mature. Additionally, the return will be absolutely tax-free.