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Sovereign Gold Bond (SGB) Scheme 2022-23 (Series II): The second tranche of the Sovereign Gold Bond Scheme 2022-23 by the central government opened for subscription on today, August 22, 2022, and it will be available for subscription until Friday, August 26, 2022.
The Reserve Bank of India (RBI) on Friday fixed the issue price of Sovereign Gold Bond Scheme 2022-23 – Series II at Rs 5,197 per gram.
The government, in consultation with the Indian central bank, will be offering a discount of Rs 50 per gram on the value to those investors who will apply online and the payment against their application is made through the digital mode.
“For such investors, the issue price of Gold Bond will be ₹5,147/- (Rupees Five thousand one hundred and forty seven only) per gram of gold,” the central bank said in its statement.
The price of the sovereign gold bonds is fixed on the basis of a simple average of the closing price of 999 purity gold, published by the India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding the subscription period (i.e. August 17-19, 2022).
Under the sovereign gold bond scheme, the RBI issues the gold bonds on behalf of the government. These bonds are sold through banks, Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), post offices, and stock exchanges – National Stock Exchange of India (NSE) and BSE.
The scheme was first launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings – used for the purchase of gold – into financial savings.
These bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram. The tenor of the bond is for a period of eight years with a premature exit option after fifth year.
The minimum permissible investment is one gram of gold and the maximum limit of subscription is 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per financial year (April-March).
The issue price for Sovereign Gold Bond Scheme 2022-23 – Series I, which was available for subscription from June 20–24, 2022, was Rs 5,091 per gram.
Speaking to indianexpress.com, Ajay Kedia, founder and director at Kedia Advisory said, “One should still go with gold bonds as higher inflation concerns and recession are with us to support gold prices and we have seen that despite rate hikes gold continues to be stable.
He sees gold prices reaching Rs 56,000-58,000 per 10 gram in the next 1 year, which is currently hovering at around Rs 51,300 on the Multi Commodity Exchange (MCX).
Nish Bhatt, founder and CEO at Millwood Kane International explained, “The investment in SGBs provides liquidity, it does not require any storage cost, easier to redeem than physical gold. Investment in SGBs comes with an interest coupon payable semi-annually.”
He further noted that gold prices are currently trading near a three-week low and “the softness is largely due to the encouraging economic data set being reported by the US. The strength of the dollar is also one of the reasons for the weakness in gold prices,” he added.
“Gold prices have risen around 8 per cent a year to date in rupee terms. Moving forward, gold prices will be guided by the pace of rate hikes and unwinding of liquidity measures by global central banks to contain inflation,” Bhatt said.
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