Stimulus measures and lower interest rates tend to support gold, which is often considered a hedge against inflation and currency debasement. Here is what you should know about the Sovereign Gold Bond Scheme 2020-21 Series IV:
What are sovereign gold bonds?
Sovereign gold bonds are issued by the Reserve Bank of India (RBI) on behalf of the government. The sovereign gold bond scheme was launched in 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings into financial savings.
What is the issue price?
The issue price has been fixed at ₹4,852 per gram while investors applying online and making payment through digital mode can avail a discount of ₹50 per gram. For such investors, the issue price of the bond will be ₹4,802 per gram of gold. 3) The issue price of sovereign gold bonds has been fixed based on the simple average of the recent closing price of of 999 purity gold as published by the India Bullion and Jewellers Association Ltd .
What is the rate of gold now?
The gold bonds have been issued at a time when domestic prices are achieving new highs. In futures market, gold prices had hit a record high of ₹48,982 per 10 gram last week.
How much can you invest?
For those who want to invest, remember the minimum permissible investment in gold bonds is one gram of gold while the maximum units are equivalent to 4 kg of gold or 4,000 units in a financial year. The issuance date of this tranche of gold bonds has been fixed on July 14. Such bonds become tradeable on stock exchanges within a fortnight of the issuance on a date, subject to liquidity. In April, the RBI had announced that the government will issue sovereign gold bonds in six tranches till September. Gold bonds have a maturity period of eight years but you have the option to exit after the fifth year. Also, it is important to note that capital gains, if any, at maturity are tax-free.