Sovereign Gold Bond 2021-22: The fourth tranche of the government-run sovereign gold bond scheme will close for subscription today - July 16, 2021. Amid the COVID-19 pandemic, gold bonds have become a preferred way for subscribers looking to invest in the yellow metal in a non-physical form. Being a government-run scheme on behalf of the Reserve Bank of India (RBI), gold bonds are considered to be safer for investment and are linked to the market price of the precious metal. (Also Read: What Are Sovereign Gold Bonds? Here's All You Need To Know )
After the present series, the gold bond scheme will be available for subscription with two more tranches. According to the RBI, an issue price of Rs 4,807 per unit, equivalent to the value of one gram of gold, is applicable for the fourth installment of the gold bond scheme 2021-22. The date of issuance for the fourth tranche is set as July 20, 2021.
Sovereign Gold Bonds 2021-22 Series IV: July 12-July 16: Here's All You Need To Know
Should You Buy?
“The price for the fourth tranche of SGB is fixed at Rs 4807/gm. The investment in non-physical gold, via digital or paper gold, is picking up pace. The high interest is on account of the recent firmness in the prices of Gold in the past few weeks.
The government on its part has been continuously trying to move investment in Gold from physical to digital/ paper gold to keep a check on the currency and larger fiscal deficit. Investment in SGB is a superior alternative to physical gold. Investment in SGB saves the cost of buying, storing, and selling the physical gold bar or coins
''The price for the yellow metal has been on an up move for the past 3 weeks as US Treasury yields dropped to a four-month low due to concerns related to the virus. The next big trigger for gold prices will be the Fed meeting later this month, rising inflation in the US is a cause of concern and any change in the stance on interest rates or liquidity by the Fed will have its impact on the prices
The latest variant of the virus has created uncertainties, rise in the number of cases. Moving forward the ability to control the virus by large countries, the pace of vaccination, global economic recovery, and the rising inflation will guide gold prices,'' said Mr. Nish Bhatt, Founder and CEO, Millwood Kane International - an investment consulting firm.
Discount For Online Subscribers
The central bank provides a discount of Rs 50 per unit on the issue price for all those subscribers who want to invest in gold bonds online by making the payment through any of the digital modes. For the online subscribers, the issue price is set at ₹ 4,757 per gram of gold in the current tranche of the gold bond scheme.
How is the issue price decided?
The nominal value of the gold bond is based on the simple average closing price, published by the Mumbai-based India Bullion and Jewellers Association Limited (IBJA) for gold of 999 purity of the last three working days of the week preceding the subscription period, according to the RBI. This means that the issue price for each tranche is calculated using a simple average of the prices given by the industry body IBJA.
How To Invest In Sovereign Gold Bonds
Subscribers can invest in the gold bond scheme through the nationalised or private banks (excluding the small finance and payments banks), stock exchanges - Bombay Stock Exchange and National Stock Exchange, Stock Holding Corporation, or the designated post offices.
The process for purchasing gold bonds is similar to that of the gold exchange-traded funds or ETFs through a stock exchange. Once the entire transaction is complete, the bonds are transferred to the buyer's account in a demat form, according to the central bank.