Don’t forget to put some money aside this month, if you’ve been considering investing in gold for a while. Indeed, the second tranche of the Sovereign Gold Bond Scheme (SGB) 2023-24 – Series II, supported by the central government, is open for subscription from September 11 to 15, following the RBI’s announcement on June 15, 2023 The show’s price has not yet been announced. Once the subscription window opens, take the opportunity to invest, as it is one of the most profitable and efficient ways to invest in paper gold.
If you are planning to invest in gold this month, bring some cash as the second tranche of the central government-backed Sovereign Gold Bond Scheme (SGB) 2023-24 – Series II is open for sale. subscription from September 11 to 15. , following the RBI’s announcement on June 15, 2023.
The issue price has not yet been announced.
SGBs are issued by the Reserve Bank of India on behalf of the government as an alternative to purchasing physical gold. Introduced in November 2015, SGBs aim to reduce demand for physical gold and redirect part of domestic savings from gold purchases to financial savings. Investors must pay the issue price in cash and the bonds will be repaid in cash upon maturity.
The minimum investment in the bond is one gram, with a maximum limit of four kilograms per financial year for individuals. Additionally, individuals, trusts, universities, Hindu Undivided Families (HUFs) and charitable institutions are all eligible investors.
The advantage of SGBs is the interest of 2.5 percent per annum, paid semi-annually on the face value. Meanwhile, if the price of gold increases, you will gain from this appreciation anyway. These bonds are also free from default risk since interest payments and principal repayment are guaranteed by the Government of India.
they come with an 8-year lock-in period, but exit options are available during the 5th, 6th and 7th years.
The Reserve Bank of India also announced an early redemption schedule for Sovereign Gold Bonds (SGBs), giving investors an opportunity to redeem these bonds before their maturity date of eight years. This new announcement is valid from October 1, 2023 to March 31, 2024.
“Investors are advised to take note of the deadline for submitting SGB redemption requests, in case they choose to redeem their holdings before maturity,” the RBI said in a statement.
“It can be argued that gold ETFs can also be held in demat form but then there is a cost aspect in gold ETFs. You normally buy gold ETFs at the prevailing unit price units of gold, but there is a transaction cost every time you enter and exit. Additionally, the annual AMC cost of 1% is also debited from the NAV of your ETF on the Gold. SGBs, on the other hand, do not have such fees. On the contrary, these gold bonds are normally issued by the government at a price lower than the average market price, providing an additional advantage, according to the brokerage house Motilal Oswal.
The deadlines for investors to submit prepayment requests for SGB 2017-18 Series III, issued on October 16, 2017, will be from September 16, 2023 to October 6, 2023.
The dates for filing an early redemption request for SGB 2017-18 Series IV, issued on October 23, 2017, will be from September 23, 2023 to October 13, 2023.
The deadline to apply for early redemption of SGB 2017-18 Series V, issued on October 30, 2017, will be from September 30, 2023 to October 20, 2023.
“Sovereign Gold Bonds (SGBs) allow investors to participate in the potential growth of gold as an asset class, the prices of which have doubled over the past 10 years. “The dematerialized form of bonds ensures purity and eliminates worries regarding deductions associated with physical gold,” said Abhijit Roy, CEO of GoldenPi, an investment platform backed by Zerodha.
Sovereign gold bonds are relatively more tax efficient than physical gold.
SGBs carry a risk of loss if the market price of gold falls below the cost price. This is not specific to SGBs and also applies to gold as an investment. The central bank, however, assures investors that they will incur losses regarding the amount of gold allocated via SGBs, according to Fisdom.
