Sovereign Gold Bonds 2021-22: Subscription For 3rd Tranche Ends Soon, Should You Buy?

Sovereign Gold Bond 2021-22: The third tranche of the government-run sovereign gold bond scheme will close for subscription tomorrow, June 4, 2021. Gold bonds have become a preferred way for subscribers looking to invest in the yellow metal in a non-physical form amid the COVID-19 pandemic. Gold bonds, linked to the market price of gold, provide additional returns and are considered to be safer in view of being a government-run scheme, on behalf of the Reserve Bank of India (RBI). (Also Read: What Are Sovereign Gold Bonds? Here's All You Need To Know )

After the present series, the gold bond scheme will be available for subscription with three more tranches. According to the Reserve Bank, an issue price of ₹ 4,889 per unit, equivalent to the value of one gram of gold, is applicable for the third tranche of the gold bond scheme 2021-22. The date of issuance for the third tranche is set as June 8, 2021.
 

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The Reserve Bank stated that the nominal value of the gold bond is based on the simple average closing price, published by the Mumbai-based India Bullion and Jewellers Association Limited or IBJA for gold of 999 purity of the last three working days of the week preceding the subscription period.
 

Should You Buy?

"The price for the third tranche of SGB is fixed at Rs 4,889/gm. Investment in Sovereign Gold Bond is picking up pace, as per data the Tranche-1 of SGB saw investment in excess of Rs 2500 crores. The high interest was also due to lower prices of Gold which reflected in the subscription price for the SGB,'' said Mr. Nish Bhatt, Founder and CEO, Millwood Kane International - an investment consulting firm.

''The advice and aim of the government, that investment should move from physical to paper gold is picking up pace. The subscription figures for FY21 were impressive and FY22 is likely to mirror it. Investment in SGB is a superior alternative to physical gold. Investment in SGB saves the cost of buying, storing, and selling the physical gold bar or coins,'' he added.

''Gold prices show promise of upside from current levels in the near future, but heavy flows in equities may affect the rally for the yellow metal. As we move forward, the economic data, monetary policy, and stance by RBI & US Fed, any further stimulus package from India, the US, and other advanced nations will guide the gold prices along with the concerns related to the virus,'' said Mr Bhatt.

Discount For Online Subscribers

For those subscribers who choose to invest in gold bonds online by making payment through any of the digital methods, a discount of ₹ 50 per unit is applicable on the issue price, according to the central bank. For the online subscribers, the issue price is set at ₹ 4,839 per gram of gold. 

How To Invest In Sovereign Gold Bonds

According to the RBI, subscribers can invest in the gold bond scheme through nationalised or private banks (excluding small finance banks and payments banks), designated post offices, stock exchanges - Bombay Stock Exchange and National Stock Exchange, and the Stock Holding Corporation.

The process for buying gold bonds is similar to that of the gold exchange-traded funds or ETFs through a stock exchange. Once the full transaction is complete, the bonds are transferred to the buyer's account in a demat form.