August Sovereign Gold: Window opens today, costs Rs 657 more, subscribe?

Source :Sify
Author :Finance Desk
Last Updated: Mon, Aug 3rd, 2020, 02:12:47hrs
Gold-bars-APNews

Mumbai: The Sovereign Gold bond scheme for the month of August is here.  The Reserve Bank of India in a notification on Friday shared details on the 2020-21 Series V Sovereign Gold Bond Scheme.  

The subscription opens with the trading window fixed for August 3 - 7 2020.  

In its notification, the RBI said the nominal value of the bond will be based on simple average closing price [published by Indian Bullion Jewellers Association, IBJA] for gold of 999 purity on last three working days of the week preceding the subscription period.  

This works out to Rs 5,534 per bond or one gram of Gold. Investors subscribing digitally can expect a discount of Rs 50 per bond.  

The August bonds cost Rs 657 more than the July bonds that opened to Rs 4,667 per bond. The July bonds were higher than previous ones by a margin of Rs 175.  

Sify.com informed investors in a previous article on how the subscription works. Bonds remain denominated in multiples or units of 1 gram. The total holding period for a bond is 8 years with an option to exit after 5 years to be exercised on the interest payment dates. The interest payable on completion of tenor is 2.50 percent. Minimum investment is 1 gm (value of bond) or 1 bond. Individual investors can buy 4 kilos or 4,000 bonds while HUFs (trusts and other similar entities) can invest 20 kilos or 20,000 bonds every fiscal.  

The SGB is a safe avenue for those keen to invest in paper-gold with no STT or capital gains tax. Long-term capital gains tax is applicable for those holding investments beyond three years. Also, bonds can be traded in secondary markets, redeemed on completion of tenor or used as collateral for loans.

Interested investors should be aware that SGBs can be sold or bought from secondary markets available on BSE and NSE. On the NSE, SGBs were last observed trading in a range of Rs 5,176 - 5,310 per bond. Subscribing in secondary markets would require a demat account and could incur brokerage charges.  

Constant rise in bullion rates, volatile currency markets and rise in coronavirus cases has resulted in a bullish trend among bullion markets. Sovereign Gold bond is a standard investment product and is considered a safe investment. If one is keen on investing in the bullish bullion markets, the SGB subscription is the most safest and easiest one to count upon.  

If you are keen to invest in SGB, try heading to authorized agencies such as Scheduled Commercial Banks (excluding RRBs, Small Finance Banks and Payment Banks), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) or recognized stock exchanges such as National Stock Exchange of India Limited and Bombay Stock Exchange Ltd for subscribing. Your broking firm should also assist in subscribing to the issue.

For those wondering whether Gold rates could come down anytime soon? Gold rates are expected to soar until a covid-cure assures investors. Experts think jewellery rates (22Karat) could zoom to levels of Rs 5,500 per gram by Dhanteras or Diwali [Novemeber'2020]. This implies bullion prices to go north in the coming few days.  

Data tracked by Sify.com for over sixty major cities has recorded a constant surge for the month of July. Gold rates in July spiked to highest of Rs 53,572 per ten grams [31 July] in Mumbai. Rates in Delhi touched Rs 53,506 while the rate for bullion in Chennai hovered at 53,739.  

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