Gold investment without storage woes? Watch to know all about Sovereign Gold Bonds

Sovereign Gold Bonds: Are you considering investing in gold but find the idea of storing and securing physical assets daunting? Well, Sovereign Gold Bonds can be a solution for you, say experts.

The upcoming subscription window for Sovereign Gold Bonds (SGBs) Series IV of the 2023-24 cycle is set to open on February 12, 2024, offering investors an opportunity to invest in gold without the hassle of storing physical assets. The subscription period will last for five days, concluding on February 16, 2024, with the issuance scheduled for February 21, 2024.

According to a statement from the Finance Ministry, these bonds will be available for purchase through various channels including scheduled commercial banks, designated post offices, and recognised stock exchanges such as the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited.

Who is eligible to invest?

Eligibility criteria for investors are specific, with individual residents, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions amongst the eligible categories. However, Non-Resident Indians (NRIs), Foreign Institutional Investors (FIIs), and minors are not permitted to participate directly.

Notably, there are annual subscription limits based on investor category, ranging from 4 kg for individuals and HUFs to 20 kg for trusts and similar entities.

The valuation of SGBs is determined by the average closing price of 999 purity gold over the three working days before the subscription period. Online subscriptions with digital payments enjoy a discount of Rs 50 per gram.

Payment methods and interest rates

Payment for SGBs can be made through various methods including cash (up to Rs 20,000), demand draft, cheque, or electronic banking. The interest rate stands at 2.50 per cent per annum, paid semi-annually, and is subject to taxation based on the investor’s income tax bracket.

Upon maturity, SGB holders are entitled to redemption at a price calculated based on the average closing price of gold over the three preceding working days. Investing in SGBs online involves a straightforward process through internet banking accounts.

While SGBs offer advantages such as capital protection and convenience compared to physical gold ownership, investors should consider diversification and the potential risks associated with fluctuations in gold prices and fixed interest rates.