On Monday, the latest tranche of the sovereign gold bonds (2019-20 - Series VIII) opened for subscription. The issue will close on 17 January 2020.
The government has set the issue price for the subscription at Rs 4,016 per gram, however, those who apply and make the payment online can avail a discount of Rs 50. For such investors, the issue price of the gold bond will be Rs 3,966 per gram.
"The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. January 08 - January 10, 2020," said RBI's notification on the valuation of Rs 4,016 per gram.
These bonds are good alternatives to investing in physical gold and one can buy as little as one gram.
Sovereign Gold Bonds are issued by the Reserve Bank India on behalf of the Government of India.
These are sold through scheduled commercial banks (except small finance banks and payment banks), SHCIL, designated post offices, NSE and BSE.
In addition to gains from changes in the metal's prices, these bonds earn interest (coupon) income if held till maturity. These bonds mature in eight years and come with exit option after the fifth year to be exercised on the interest payment dates.
SGBs are tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI. This means that even if you fail to participate in the current issue, you can purchase them or bonds from previous issues on NSE or BSE through a registered stockbroker from subscribers who wish to sell them.
Similarly, one can also exit by selling the bonds at the exchanges before maturity.