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The Sovereign Gold Bond Scheme 2021-22 – Series X by the central government has opened for subscription today, February 28, 2022, and it will be available for five days until Friday, March 4, 2022. The Reserve Bank of India (RBI) last Friday fixed the issue price at Rs 5,109 per gram.
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Under this scheme, the RBI issues the bonds on behalf of the Government of India. The bonds are sold through banks, Stock Holding Corporation of India (SHCIL), designated post offices, and recognised stock exchanges – National Stock Exchange of India (NSE) and BSE.
The Government of India, in consultation with the central bank, has decided to offer a discount of Rs 50 per gram on the nominal value to those investors who will apply online and the payment against their application is made through digital mode.
“For such investors, the issue price of Gold Bond will be ₹5,059/- (Rupees Five thousand and fifty-nine only) per gram of gold,” the RBI said in its statement.
The issue price for Series IX, which was available for subscription from January 10–14, 2022 was Rs 4,786 per gram.
The price of the bond is fixed in Indian rupees on the basis of a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding the subscription period (i.e. February 23, February 24, and February 25, 2022).
These bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram. The tenor of the bond will be for a period of eight years with exit option after fifth year to be exercised on the next interest payment dates.
The minimum permissible investment is one gram of gold and the maximum limit of subscription is 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per financial year (April-March).
The sovereign gold bond scheme was launched in November 2015 with an objective to cut down the demand for physical gold and shift a part of the domestic savings – used for the purchase of gold – into financial savings.
Speaking on the sovereign gold bond scheme, Nish Bhatt, Founder and CEO at Millwood Kane International, said, “Moving investment from physical gold to digital/paper gold has been a big success for the government via the SGB, wherein it has raised over Rs 32,000 crores since its inception in 2015. Investing in paper gold (SGBs) is a better and less hectic option as there is no storage cost, making charges in the case of gold jewelry.”
He added that gold prices have rallied to more than a year high due to the geopolitical tensions and said “Historically, gold has attracted investment in times of uncertainty due to its safe-haven nature. The situation in Ukraine has also led to a spike in crude prices. A rally in oil prices put pressure on the INR (rupee), thereby making gold more costly. Currently, gold is supported by international as well as local developments.”
Lastly he noted that moving forward, the development in Ukraine and US Fed action will provide direction to most asset classes but a higher crude price and inflation in India, subsequent pressure on rupee will continue to support gold prices in the short to medium term.
