Sovereign gold bonds: Two tranches up for premature redemption today; investors make up to 147% returns
The 2019-20 Series IX (issued in February 2020) and the 2020-21 Series V (issued in August 2020) can be redeemed today at ₹ 10,070 per gram, the RBI said, providing investors the opportunity to earn up to 147% returns on their investments.
The redemption price of the SGBs has been decided based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA).
While the tenure of these gold bonds is eight years, investors have the option of premature redemption after the fifth year from the date of issue.
Sovereign Gold Bonds 2019-20 (Series IX) were open for subscription from February 3 to February 7, 2020. The issue price of the SGB during the subscription period was set at ₹ 4,070 per gram.
Therefore, at the current redemption price, investors can make a return of up to 147%.
Sovereign Gold Bonds 2020-21 (Series V) were open for bidding between August 3 and August 7, 2020. The issue price for the bond during the subscription period was ₹ 5,334, resulting in an absolute return of 89% on the investment.
Gold prices have been in a sharp uptrend over the past few years, impacted by the pandemic, the Russia-Ukraine war, the weakening US dollar and now the global uncertainty created by tariffs unleashed by US President Donald Trump.
SFBs are government-backed securities linked to the price of gold. These bonds are issued by the Reserve Bank of India on behalf of the Government of India.
SGBs give you a fixed interest of 2.50% per year on your initial investment. This interest is paid to your bank account twice a year, and the final interest payment comes along with the principal amount when the bond matures.
If you want to withdraw the bond before maturity, you need to contact your bank, SHCIL office, post office, or agent at least 30 days before the next interest payment date. The request must be made at least one day before the interest payment date. Once approved, the money will be transferred to your bank account provided during the application, according to the details available on the RBI's website.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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