The RBI has set the redemption price for the first tranche of Sovereign Gold Bond (SGB) scheme at Rs 6,938 per gram, providing investors a whopping 122% income from the August 2016 issue. This marks a significant increase from the issue price of Rs 3,119 per gram. The latest redemption date has been fixed as August 5, Monday, giving investors a chance to earn substantial returns.
The SGB Series I was launched on August 5, 2016, with a repayment period of eight years from the date of issue. The redemption price is determined based on the average closing price of gold of 999 purity in the week prior to redemption, as reported by the IBJA. The issue price is based on the average closing price for gold of 999 purity in the week preceding the subscription period. Investors also have the option for premature redemption after the 5th year.
The SGBs are available for purchase by resident individuals, HUFs, Trusts, Universities and Charitable Institutions. The denominations are in multiples of grams of gold with a minimum investment of one gram. The maximum subscription limit is 4 kg for individuals, 4 kg for HUFs, and 20 kg for trusts and similar entities per fiscal year.
In related news, the October gold futures closed at Rs 69,792 on the MCX, with a slight drop from the day’s high of Rs 70,965. The rise in prices was attributed to the increase in the US July unemployment numbers, prompting hopes of a September rate cut by the Federal Reserve.
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