Sovereign Gold Bonds 2021-22: Subscription For 1st Tranche Ends Soon, Should You Buy?

Sovereign Gold Bond Scheme 2021-22: Subscribers can even earn interest on their investment in the gold bond scheme, the current series of which is open till tomorrow -May 21

Sovereign Gold Bonds 2021-22: Subscription For 1st Tranche Ends Soon, Should You Buy?

Sovereign Gold Bonds are available at an issue price of ₹ 4,777 per unit

Sovereign Gold Bond 2021-22: The first tranche of the government-run sovereign gold bond scheme will close for subscription tomorrow - May 21, 2021. The gold bonds, which are linked to the market price of gold, offering additional returns, are one of the few ways to invest in the yellow metal in a non-physical form. Amid the COVID-19 pandemic, gold bonds have also come under the digital gold umbrella, which is a safer and convenient way to buy gold, considering the circumstances. After this series, the gold bond scheme will be available for subscription with five more tranches. (Also Read: What Are Sovereign Gold Bonds? All You Need To Know )

According to the Reserve Bank of India, an issue price of ₹ 4,777 per unit, equivalent to the value of one gram of gold, is applicable for the first installment of the gold bond scheme 2021-22. The issue price set for each tranche is calculated using a simple average of prices provided by Mumbai-based India Bullion and Jewellers Association (IBJA), an industry body.


Sovereign Gold Bonds 2021-22 Series I: May 17-May 21: Here's All You Need To Know


Should You Buy?

''Investment in SGB tranche-1 makes sense as the bond will be available for a lower price as compared to the current prices of gold. Gold prices have been on the rise due to uncertainties created by the second wave of COVID-19 cases, softening of the treasury yields, and concerns of rising inflation in the US,'' said Mr. Nish Bhatt, Founder and CEO, Millwood Kane International - an investment consulting firm. 

''Gold prices have been trading near a three-month high. Though the Fed Reserve has assured of low rates in the US for a long period of time, moving forward its commentary on the rising inflation, unemployment, and the impact of the second wave, geopolitical tensions in the middle east will guide gold prices,'' added Mr Bhatt.
 

How To Invest In Sovereign Gold Bonds

There are several ways available for investors to park their funds in gold bonds. One can invest in the gold bond scheme through the nationalised as well as private banks, designated post offices, stock exchanges including BSE and NSE, and the Stock Holding Corporation.

The process for buying the gold bonds is similar to that of gold exchange-traded funds (ETFs) through a stock exchange. Once the full transaction is complete, the bonds are transferred to the buyer's account in Demat or dematerialised form.
 

Discount For Online Subscribers

For all those subscribers who are investing in gold bonds online in which the payment is made through any of the digital modes, a discount of ₹ 50 per unit is applicable, said the Reserve Bank. For the online subscribers, the issue price is set at ₹ 4,727 per gram of gold.