- Sovereign Gold Bond scheme to open for subscription on August 31
- Value of these bonds is linked to market price of gold
- Gold bonds come with additional annual return of 2.5%
Sovereign Gold Bond 2020-21 Scheme: Subscription under the fifth tranche of the government's Sovereign Gold Bond (SGB) 2020-21 programme ended on Friday. The subscription window will open once again, for a period of five days, from August 31 to September 4. This will be the sixth and last instalment of Sovereign Gold Bonds in the current financial year. Issued by the Reserve Bank of India, the value of these bonds is linked to the market price of gold. The gold bonds provide benefits such as an additional annual return of 2.5 per cent and a discount on online subscription. (Track Current Gold Rates Here)
Launched in 2015, the Sovereign Gold Bond and Gold Monetisation schemes are aimed at curbing gold imports for the country, which is the world's second largest consumer of the yellow metal.
Who Can Buy Gold Bonds
Resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions can park their funds in gold bonds, subject to investment limits.
Where To Buy Gold Bonds
Eligible entities can purchase the gold bonds from designated post offices, stock exchanges BSE and NSE, and the Stock Holding Corporation.
A minimum of one gram and a maximum of four kilograms of gold can be acquired by eligible individuals and HUFs in a financial year. Trusts and similar entities can purchase up to 20 kilograms in a financial year.
A discount of Rs 50 per gram is available for online subscribers, aimed at promoting digital payments.
For each tranche of the gold bond scheme, the issue price is calculated based on an average of jewellery rates provided by Mumbai-based industry body IBJA. For example, an issue price of Rs 5,334 per gram was applicable to the fifth instalment of gold bonds, subscription for which ended on August 7.
(Also Read: Gold's "Dream Run" May Continue, Say Analysts)
Typically, gold shares an inverse relationship with equities, and the safe-haven appeal of the precious metal rises with any sign of increased risk in equities.