This Article is From May 27, 2021

Sovereign Gold Bonds 2021-22: Subscription For 2nd Tranche Ends Soon, Should You Buy?

Sovereign Gold Bond Scheme 2021-22: Subscribers can earn interest and get assured returns on their investment in gold bonds, the current series of which is open till tomorrow - May 28

Sovereign Gold Bonds 2021-22: Subscription For 2nd Tranche Ends Soon, Should You Buy?

Sovereign Gold Bonds are available at an issue price of ₹ 4,842 per unit

Sovereign Gold Bond 2021-22: The second tranche of the ongoing government-run sovereign gold bond scheme will close for subscription tomorrow, May 28, 2021. Amid the COVID-19 pandemic, gold bonds have come as safe haven for subscribers looking to invest in the yellow metal in a non-physical form. Gold bonds offer additional returns and are linked to the market price of gold. Yesterday, gold futures traded higher and the yellow metal rallied to smash the Rs 49,000 mark, achieving a four-month high mostly driven by a fall in US Treasury yields and softer American currency. (Also Read: Second Tranche Of Gold Bonds Scheme Opens On May 24: Check Issue Price )

Under the digital gold category, sovereign gold bonds are preferred by investors as they are issued by the government, on behalf of the Reserve Bank of India. After the present series, the gold bond scheme will be available for subscription with four more tranches. According to the central bank, an issue price of ₹ 4,842 per unit, equivalent to the value of one gram of gold, is applicable for the second tranche of the gold bond scheme 2021-22. The date of issuance for the second tranche is set as June 1, 2021.

Sovereign Gold Bonds 2021-22 Series II: May 24-May 28: Here's All You Need To Know

Should You Buy?

''Gold Bonds is a better alternative to physical gold as there is no risk of theft, storage charge, and to top it up it comes with an interest-bearing coupon. Gold prices have been on an up move due to uncertainties created by the second wave of COVID-19 cases, concerns of rising inflation in the US, and a weaker US dollar. Gold prices have been trading near a four-month high in the international market,'' said Mr. Nish Bhatt, Founder and CEO, Millwood Kane International - an investment consulting firm. 

''The high volatility in cryptocurrencies has led to investors flocking back to gold for stability. Moving forward the critical US Fed meeting next month on possible reversal of liquidity measures, the impact of the second wave, inflation level, and unemployment data in the US will guide gold prices..” added Mr Bhatt.

Discount For Online Subscribers

For those individuals who choose to invest in gold bonds online by making payment through any of the digital modes, a discount of ₹ 50 per unit is applicable on the issue price, according to the Reserve Bank of India. For the online subscribers, the issue price is set at ₹ 4,792 per gram of gold. 

How To Invest In Sovereign Gold Bonds

Subscribers can invest in the gold bond scheme through the nationalised or private banks (excluding small finance banks and payments banks), designated post offices, stock exchanges including Bombay Stock Exchage and National Stock Exchange, as well as the Stock Holding Corporation.

The process for buying gold bonds is similar to that of the gold exchange-traded funds or ETFs through a stock exchange. Once the full transaction is complete, the bonds are transferred to the buyer's account in a demat or dematerialised form. Every application must be accompanied with the PAN details of the subscriber issued by the Income Tax department.

Minimum, Maximum Limit For Investment

According to the Reserve Bank of India, the minimum limit of subscription for the gold bonds issued will be one gram and the maximum limit per financial year will be four kg for individuals. For the Hindu undivided families (HUF), the maximum limit is four kg, and for the trusts and similar entities notified by the government, the limit is 20 kg.