The sixth tranche of gold sovereign bonds for this fiscal year, opened for subscription on Monday, closes today. The issue price was set at ₹5,117 per gram and investors who apply online and pay online receive a reduction of ₹50 per gram. The minimum authorized investment is 1 gram of gold.
Gold prices in India have been very volatile in recent weeks and are currently trading at around ₹51,000 for every 10 grams on the futures market. Last month, prices hit record highs of ₹56,200.
Experts say sovereign gold bonds are an effective way to invest in non-physical gold, if a buyer holds to maturity. The investor does not have to worry about the storage of the gold if it is held in demat form and there is no GST tax, unlike physical gold.
In addition, gold bonds offer an annual interest rate of 2.50% to investors. Capital gains, if any, at maturity are tax free. This is an exclusive benefit available on gold bonds.
The date of issue of this last tranche of gold bonds will be September 8, 2020.
Gold bonds have an eight-year maturity period with an option to exit after the fifth year. The redemption price is based on the then prevailing gold price – simple average of the closing price of 999 purity gold for the previous 3 business days from the redemption date, published by the India Bullion and Jewelers Association Limited.
The bonds are tradable on the stock exchange within fifteen days of issue, subject to liquidity. Analysts say investing in gold bonds is a good idea if you plan to hold gold until the bonds mature.
Gold bonds can be used as collateral for loans.