The fourth tranche of sovereign gold bonds of this fiscal (2020-21) will open for subscription tomorrow and will close on July 10. The issue price has been fixed at ₹4,852 per gram while investors applying online and making payment through digital mode will get a discount of ₹50 per gram. For such investors, the issue price of bond will be ₹4,802 per gram of gold.
“Investors get dual benefit in sovereign gold bonds as they earn a fixed 2.5% coupon over and above the price appreciation, Gold is expected to yield further returns for investors till clarity emerges on the global economic outlook, a vaccine for the virus and trade tensions between China and the US,” said Nish Bhatt Founder & CEO, Millwood Kane International.
“Gold has had a phenomenal year; it has rallied over 20% in terms of value. April-June quarter was the best quarter in more than four years in terms of appreciation. A safe haven and a hedge against inflation have become an attractive investment class due to global uncertainties. Easy monetary policy across the globe has also helped the yellow metal,” he added.
Here are key things to know about the Sovereign Gold Bond Scheme 2020-21 Series IV:
1) The government is coming out with gold bonds at a time when domestic prices are hitting new highs. In futures market, gold prices had hit a record high of ₹48,982 per 10 gram on Wednesday.
2) 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.
3) The issue price of sovereign gold bonds is fixed based on recent closing price of gold as published by the India Bullion and Jewellers Association Ltd for gold of 999 purity.
4) The minimum permissible investment in gold bonds is one gram of gold.
5) The issuance date of this tranche of gold bonds has been fixed on July 14.
6) Bonds become tradeable on stock exchanges within a fortnight of the issuance on a date, subject to liquidity.
7) The RBI in April had announced that the government will issue sovereign gold bonds in six tranches till September. Here are the details of other tranches of gold bonds that will be issued till September:
2020-21 Series V gold bonds
subscription date – August 03-07, 2020
Issuance date- August 11, 2020
2020-21 Series VI gold bonds
subscription date – Aug.31-Sept.04, 2020
Issuance date – September 08, 2020
8) Gold bonds offer an annual interest rate of 2.50% to investors. The interest on gold bonds will be added to the subscriber’s income and taxed accordingly.
9) Gold bonds have a maturity period of eight years but investors will have the option to exit after the fifth year.
10) Capital gains, if any, at maturity is tax-free. This is an exclusive benefit available on gold bonds.
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