Planning to Invest in Gold? From August 3 Investments Can be Made in Sovereign Gold Bonds


From the past few months, the world is witnessing an unprecedented hike in the price of the precious yellow metal. The fifth series of sovereign gold bonds will open for investment from Monday in the fiscal year 2020-21. It can be invested in gold bonds from August 3 to 7. Under this, the price of gold per gram has been fixed at Rs 5334. Those who apply for them online and pay through digital payment will get a discount of 50 rupees per gram.

What is Sovereign Gold Bond?

The sovereign gold bond is a government bond. It can be converted into a DEMAT form. Its value is not in rupees or dollars, but the weight of gold. If the bond is five grams of gold, then the price of five grams of gold will be the same as the price of the bond. To buy it, the authorized broker of SEBI has to pay the issue price. At the time of redeeming the bond, the money gets deposited in the investor’s account. The bond is issued by the Reserve Bank of India (RBI) on behalf of the government

RBI is issuing this bond

The RBI is issuing these bonds on behalf of the Government of India. According to the RBI, “The bond price is based on the simple average closing price (published by the India Bullion and Jewellers Association) over the last 3 working days for 999 purity gold.” Earlier, the issue price of bonds opened for subscription in the third series between July 6 and 10 was Rs 4,852 per gram.

50 rupees per gram discount on online application and payment

A discount of Rs 50 per gram of gold has been introduced for online application and payment for sovereign gold bonds. That is, the investor gets a profit of 50 rupees only while investing.

2.50% interest on the issue price

Sovereign gold bonds earn a fixed interest of 2.50% every year on the issue price. This money is automatically deposited in your account every 6 months. You do not get this kind of benefit on physical gold and gold ETFs. According to the information given on the NSE website, one advantage of investing in sovereign gold bonds is that after 8 years of the maturity period, there is no tax on the profits. Also, there is no TDS on the interest paid every six months.

You can buy gold from 1 gram to 4 kg

A person can buy a bond of a minimum value of 1 gram and a maximum of 4 kg in a financial year. However, the maximum purchase limit for a trust is 20 kg. Any person can buy 500 grams of gold bonds in a fiscal year. Bond’s maturity period is 8 years old. But investors get a chance to exit after 5 years. That is, if you want to remove it, you can remove it after 5 years. According to the NSE, these sovereign gold bonds can also be used as collateral while taking loans. Apart from this, these bonds also trade on the NSE.

No GST or Making Fee

When you buy physical gold, you not only pay the price of gold, you also pay the making charge. You also pay three percent GST on the price of gold and 5 percent GST on the making charge. This increases the price of gold considerably. There is no GST on investment in Sovereign Gold Bonds. Since it is a bond, there is no making charge on it.

No worries about purity and safety

When you buy gold blocks or gold jewelry, you may have doubts about its purity. Also, it is not safe to keep it. But there is no need to worry about purity in sovereign gold bonds. According to the National Stock Exchange (NSE), the price of gold bonds is linked to the price of gold of 24-carat purity published by the Indian Bullion and Jewelers Association (IBREA). Also, it can be kept in Demat form, which is quite safe and does not cost anything.

Sovereign Gold Bonds to be issued 6 times

The government had decided to issue sovereign gold bonds 6 times in 6 months i.e. from 20 April to 4 September. 4 have been released while the fifth one is to be released between 3rd to 7th August. In April, the first government launched the first series from April 20 to 24. Under this, the price of gold per gram was fixed at Rs 4,639.

Gold gives 37 percent return in a year

There has been an atmosphere of fear among investors due to the Corona epidemic. Meanwhile, the price of gold is continuously increasing. It has always been seen that whenever the stock market fears a loss, other than the dollar, the price of gold is seen to be weak when the currency is weak. In the last one year itself, gold prices have jumped by more than 37 percent. On 1 August 2019, the price of gold was close to Rs 38500, which is now Rs 53 thousand. Has reached beyond 10 grams. Experts say that if the corona lasts for a long time and because of this there is uncertainty in the market, then its price will increase further.

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