Sovereign Gold Bonds Investment: Two More Days Left To Subscribe In SGB Series III, Should You Buy?

Subscription for sovereign gold bonds in series III for FY24 is nearing its end. RBI launched Series 3 on December 18 and has fixed December 22nd as the closing date. With just two more days left for series III, the expert believes that this is an ideal investment opportunity for investors looking for long-term wealth creation.

SGBs in series 3 have an issue price of Rs 6,199 per gram of gold. This will be the nominal value of the bond which is 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. December 13, December 14, and December 15, 2023.

However, RBI is also offering a discount of Rs 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 a Gold Bond is Rs 6,149 per gram of gold.

Should You Buy SGBs Series 3?

Nish Bhatt, Founder & CEO, of Millwood Kane International, said, "The latest Sovereign Gold Bonds Series III opened today, 18th December, and will remain available for five trading days till 22nd December. The issue price of the current tranche of the gold bonds has been set at Rs 6,199 per unit by RBI, offering a secure avenue for investors seeking exposure to gold."

He added, "Historically, Gold has yielded strong returns. If we look at 2023 alone, despite geopolitical tension, a weaker dollar, and being volatile, Gold is currently traded at its lifetime high price of 63,630/-, offering a 14.95% return this year. If we look at the long-term, its price has more than doubled in the last 10 years."

Hence, he said, "the scheme is an ideal investment opportunity for investors willing to hold on to their investments for the long term".

SGBs are Investors who have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by the Reserve Bank on behalf of the Government of India. investment to hold physical gold. They are government securities denominated in grams of gold.

Who is eligible to invest in SGBs? As per RBI guidelines, persons resident in India as defined under the Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

According to RBI's FAQS, the quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or demat form eliminating the risk of loss of scrip etc.

However, RBI also stated that there may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.