How To Invest In Sovereign Gold Bonds, 5-Day Subscription Window Opens On July 6

Sovereign Gold Bonds (SGBs) are government-run bonds linked to the market price of the yellow metal. The subscription window for the government-run Sovereign Gold Bond programme, wherein the Reserve Bank of India (RBI) issues bonds on behalf of Government of India, is set to open for five days starting July 6. After July 10, the gold bonds will be open for purchase next in August, and then in September. But is it advisable to invest in gold at the current juncture, when the uncertainty linked to the fast-spreading coronavirus pandemic has pushed the previous metal to all-time highs? Financial experts say accumulation of gold in small quantities is suitable for long-term investors.

How To Invest In Sovereign Gold Bonds

There are multiple routes available to investors to park their funds in gold bonds. One can invest in the SGB scheme through nationalised as well as private banks, designated post offices, stock exchanges BSE and NSE, and their agents, and the Stock Holding Corporation. The process for buying gold bonds is similar to gold exchange traded funds (ETFs) through a stock exchange. Once the transaction is complete, the bonds are transferred to the buyer's account in demat or dematerialised form.

"Sovereign gold bonds are one of the best investment options in gold for long-term investments... For those who have little or no exposure to gold, this can be a good opportunity to add gold to their portfolio," says Rahul Agarwal, director at Delhi-based financial services firm Wealth Discovery. "It is always advisable to have exposure to some amount of gold in an investment portfolio for hedging and diversification purposes and the lockin period serves that purpose very well."

"Gold is currently in a secular bull trend which is expected to last for a good couple of years and there are ample reasons for this scenario to continue," he adds.

Here's all you need to know about the gold bond price, interest rate and discount for online buyers:

Issue Price

An issue price of Rs 4,852 per gram has been set for the fourth instalment of Sovereign Gold Bonds. The rate is arrived at by taking a simple average of gold of 99.9 per cent purity by the Mumbai-based industry body IBJA for the last three working days of the week preceding subscription.

Interest Rate

Investment in the SGB scheme fetches interest at the rate of 2.5 per cent per annum, which is payable on a semi-annual basis.

Discount For Online Subscribers

A discount of Rs 50 per gram is offered for e-buyers.