Sovereign Gold Bonds

A government-issued instrument known as a Sovereign Gold Bond (SGB) enables investors to purchase gold without actually holding it.

It’s a way to profit from the increase in value of gold and earn a set interest rate without having to deal with the hazards and inconveniences of keeping actual gold in storage.

The value of the bond is expressed in grams of gold, and the price at which it can be redeemed is determined by the current price of gold on the market.

Sovereign Gold Bond (SGB): What is it? The issuer is who?¹

Government securities that are valued in grams of gold are known as SGBs. They serve as an alternative to holding actual gold. Bonds will be redeemed in cash at maturity, and investors must pay the issue price in cash. The Reserve Bank is issuing the bond on behalf of the Indian government.

Why should I purchase SGB instead of actual gold? What are the advantages?

Since the investor receives the current market price at the time of redemption or early redemption, the amount of gold for which he paid is protected. An excellent substitute for physically keeping gold is the SGB. Storage expenses and hazards are removed. Periodical interest and the market value of gold at maturity are guaranteed to investors. SGB is exempt from problems such as manufacturing fees and purity when it comes to gold jewelry. The risk of scrip loss, etc., is eliminated because the bonds are held in the RBI’s books or in demat form.