Sovereign Gold Bond

Sovereign Gold Bonds (SGBs) are RBI issued on behalf of the Government of India securities that are government-backed and are accounted in respect of grams of gold. These securities provide an alternative to holding physical gold. The value of these securities is linked with the value of gold and therefore the investment fluctuates based on the price of the gold. These bonds are purchased at the issue price and redeemed for cash upon maturity.

An investor willing to invest in SGBs can purchase it from NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) at the time of initial sale declared by RBI at the issue price. After issuing, they can only be traded at the market price on these exchanges at the prevailing market price, providing investors liquidity in buying and selling the securities.

SGBs due to their dual benefit of price appreciation and a fixed annual interest rate of 2.5% are considered as the “Best Gold Investments in India”. They are a good source to enjoy capital gains and regular income as they provide income other than the fluctuation taking place in the price of the physical gold.

As per the changes in the investment policy for SGBs in 2018, Individuals and Hindu Undivided Families (HUF) can now hold up to 4 kgs of SGBs which was earlier restricted to 500g only, limiting their potential exposure to securities and profits from the investment cycle.