Sovereign gold bonds 2021-22 (series VIII) as per the Government of India announcement will open for a 5 day period between November 29-December 03, 2021. As part of the schema, the RBI issues bonds on behalf of the government of India.
As per the RBI notification, the issue price of the SGB Series VIII is fixed at a price of Rs. 4791 per gm. For investors who apply for the SGB online and make the payment via the digital route, the government in consultation with the RBI has decided to offer a discount of Rs. 50 per gram on the issue price. For such investors, issue price will be reduced to Rs. 4741 per gram of gold.
In order to encourage digital investment into gold and provide an alternative to physical gold, government in the year 2015 introduced SGB or sovereign gold bonds under Gold Monetisation scheme.
The bonds denominated in multiples of gram(s) of gold with a basic unit of 1 gram come with a tenure of 8 years with an exit option in the 5th, 6th and 7th year, to be exercised on the interest payment dates.
Other than the capital appreciation on gold, investors are also provided interest rate at a fixed rate of 2.5% per annum payable semi-annually on the nominal value.
On Friday, on the emergence of the new Covid variant in South Africa, gold's 'safe haven' buying got a boost and in the international markets spot gold settled higher at $1792 per oz after breaching levels of over $1800 per oz.
" The price for the Sovereign Gold Bond tranche-8 has been fixed at 4791/gm. The Sovereign Gold Bond is an effective way of taking exposure to gold. There is storage cost, as the holding format is digital, plus the investor stands to gain a 2.5%/pa interest. The government has raised over Rs 31,000 cr of funds via the scheme. SGB is a favored route for the government to convert all gold investments into a digital mode, it will help keep the deficit under control, provide support to the currency.
After hitting a 9-month high earlier in the month, gold prices were trading in a narrow range for the past few sessions. The fears surrounding the new variant of virus has raised fresh concerns, leading to a softness in USD, pushing gold prices higher. But the improving economic scenario, inflation levels around the world, likely rate hikes to contain inflation is likely put pressure on gold.
Moving forward, the US Fed meeting in December, the likely guidance on rates, economic data, and movement of the dollar will guide prices of gold in the near to mid-term.", views as expressed by Mr. Nish Bhatt, Founder & CEO, Millwood Kane International on SGB Tranche 8.