Sovereign gold bond opens next week. Date, price, other details; apply or not?

Issuing a press statement in regard to sovereign gold bond price, date and other details, RBI said, “Sovereign Gold Bond Scheme 2023-24 – Series II will be open for subscription during September 11–15, 2023. The nominal value of the bond based on the simple average of closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. September 06, September 07, and September 08, 2023 works out to ₹5,923/- (Rupees Five thousand nine hundred and twenty three only) per gram of gold.”

Discount for online applicants

“Government of India, in consultation with the Reserve Bank, has decided to offer a discount of ₹50/- per gram less than the nominal value to those investors applying online and making the payment against the application through digital mode. For such investors, the issue price of Gold Bond will be ₹5,873/- (Rupees Five thousand eight hundred and seventy three only) per gram of gold,” RBI said.

Sovereign gold bond scheme 2023-24 series 2 will be sold through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and recognised stock exchanges — the NSE and the BSE.

Important sovereign gold bond September 2023 details

1] Sovereign gold bond price: The RBI has fixed issue price at ₹5,923 per 10 gm.

2] Sovereign gold bond discount: The RBI has announced ₹50 per 10 gm discount for online applicants to the new tranche of sovereign gold bond September 2023.

3] Sovereign gold bond date: The RBI has announced that second tranche of sovereign gold bond 2023 will open for subscription on 11th September 2023 and it will remain open for bidding till 15th September 2023. This means, Sovereign gold bond scheme 2023-24 series 2 will be available from Monday to Friday next week.

4] How to apply: Sovereign gold bond scheme 2023-24 series 2 will be sold through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and recognised stock exchanges — the NSE and the BSE.

5] Eligibility: The sovereign gold bond scheme is restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.

6] Tenor: The tenor of the sovereign gold bond scheme will be for a period of eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable.

7] Investment limit: Minimum permissible investment limit in sovereign gold bond scheme is one gram. However, the maximum limit of subscription shall be 4 Kg for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal year (April-March) notified by the Government from time to time.

8] Redemption price: The redemption price under sovereign gold bond scheme will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous three working days published by IBJA.

9] Sovereign gold bond interest rate: The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.

10] Should you apply: Giving ‘subscribe’ tag to Sovereign gold bond scheme 2023-24 series 2, Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors said, “Gold prices have been trading slightly subdued after testing record highs of Rs.61,845 per 10 grams during the second quarter of 2023. However, as we approach the wedding and festival season in India, gold is likely to attract attention all over again.”

Sugandha said that outlook for gold is positive in the medium to long term. Investors can allocate 10-15% of their portfolios to gold to diversify their risk and protect their wealth against rising price pressures and economic uncertainty.

On why one should apply for sovereign gold bond September 2023 tranche, Sugandha listed out the following four reasons:

1] Central banks around the world are accumulating gold in huge quantities amid growing economic uncertainties and a growing push towards de-dollarization. This is seen as a vote of confidence in gold as a safe haven asset.

2] Markets are anticipating that the US central bank is near the end of its rate hike cycle. This is good news for gold, as higher interest rates tend to weigh on gold prices.

3] Concerns about a weakening global economy are likely to sustain gold’s allure as a safe haven investment. Gold is seen as a hedge against inflation and economic instability.

4] Gold prices have already corrected from their peak of Rs.61,845 per 10 gm and have been consolidating around the near-term support zone of Rs.57,500-58,000 per 10gm. This could be an opportunity for investors to add gold to their portfolios in a phased manner and sovereign gold bonds are one of the best instruments to gain exposure to gold if one has a long-term horizon.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Updated: 09 Sep 2023, 08:26 AM IST