Sovereign Gold Bond Begins Today, Should You Subscribe?

The Sovereign Gold Bond scheme 2023 subscription started on 6th March, 2023. Here are the key points of this govt-backed digital gold scheme.

The Series IV of the Sovereign Gold Bond Scheme 2022–23 has been made available for subscription as of March 6 (Monday) by the Reserve Bank of India (RBI). For this fiscal year, this would be the final tranche. 

This has a subscription period that lasts through March 10. The issue price for one gram of gold has been set by the RBI at Rs 5,611. 

Also Read:- Sovereign Gold Bonds: How To Buy Gold Online At A Discount? (Step-by-Step Guide)

In contrast, the RBI provided a December 2022 issue price of Rs 5,409 per gram. Notably, investors who apply online and pay using electronic means receive a discount of Rs 50 per gram.

The minimum amount of gold that may be invested is one gram, and the maximum amount per fiscal year is four kilograms for individuals, four kilograms for Hindu Undivided Families, and twenty kilograms for trusts and other similar entities. 

Banks, the Stock Holding Corporation, post offices, and recognized stock exchanges all sell these bonds.

Eight years are required for the maturity of gold bonds, with a fifth-year exit option. However, if a shareholder wants to get out of the bonds before the 5-year lock-in period, they can always sell them on stock exchanges. Based on the gold price at the time, the redemption price is determined.

SGB investments are available to any resident under the Foreign Exchange Management Act (FEMA). Universities and individuals can invest in SGBs through HUF trusts, whether they are public or private. 

The guardian of a minor may even invest on his or her behalf. An NRI is not permitted to purchase these bonds, but they may be held as the nominee of a resident investor who purchased them.

Unlike physical gold, storing sovereign gold bonds isn’t a hassle. When it comes to investing in SGBs, there is no storage concern like there is with physical gold, making them more secure.

In contrast to gold coins and bars, sovereign gold bonds are not subject to the goods and services tax (GST). Like when purchasing actual gold, you must pay 3% GST when purchasing digital gold. Moreover, SGBs do not have any making charges.

Bonds issued by sovereigns in gold may be used as collateral for loans. The loan-to-value (LTV) ratio must be set at the same level as the standard gold loan as required from time to time by the Central Bank of India (RBI). The authorized banks must mark the bond’s lien in the depository.

Under the Gold Monetization Program, the government introduced the Sovereign Gold Bond Scheme in November 2015. The RBI opens the issues for subscription under the plan in stages.

In order to apply for these bonds, you will need either a voter identification card, an Aadhaar card or PAN, or a TAN or a passport as proof of identity.

Should you Invest in Sovereign Gold Bonds (SGB)?

Historically, gold has been viewed as a secure investment option, especially during downturn markets or periods of high volatility. 

Gold is a good hedge since it diversifies your portfolio and, during stressful times like this one, has an inverse relationship with the market. 

Also Read:- Sale of Gold Jewellery Without Hallmark To Ban After 31st March

SGBs should be included in your investing portfolio, according to analysts, as they aid in diversification. Financial advisors advise investing 10 to 15 percent of a person’s assets in gold.

SGBs also provide the highest returns among all options for purchasing gold, including capital appreciation (market gains brought on by an increase in gold prices) and additional interest at a rate of 2.5% annually, which is one of its key advantages.