The Sovereign Gold Bond Scheme 2022–23 – Series III, which is open for subscription from December 19–23, 2022, has been announced by the Reserve Bank of India (RBI).
Since the investor receives the current market price at the time of redemption or premature redemption, the amount of gold for which he pays is protected. Investors who purchased gold bonds three years ago are currently sitting on a gain of 45%, while those who purchased them five years ago have seen a valuation increase of 89%.
The nominal value of the bond is equal to Rs 5,409 per gramme of gold based on the simple average closing price for 999-purity gold for the last three working days of the week prior to the subscription period, December 14, 15, and 16, 2022, as published by the India Bullion and Jewellers Association Ltd (IBJA). Investors who apply online and pay for the application using digital means receive a discount of Rs 50 per gramme less than the nominal value.
The RBI announced on Friday that the Series XII gold bonds, which were issued in December 2017 at a price of Rs 2,890 per gramme, will be redeemed on December 17 at a price of Rs 5,409 per gramme, a gain of 89.16%.
In November 2021, the RBI made the gold bonds available at a price of Rs 4,791 per gramme. This has since increased to Rs 5,409, representing an increase of 12.89%. With the 2.50 percent interest rate the RBI is offering, the return for investors after a year is 15.39 percent. At the current market price, investors who purchased gold bonds in November 2019 for Rs 3,795 per gramme are sitting on a gain of 42.52 percent.
Gold bonds pay interest at a rate of 2.50 percent (fixed rate) per year on the amount of the initial investment, while banks offer 6.70–7% interest on one-year deposits. The investor’s bank account will receive interest credits biannually, and the final interest payment will be due at maturity along with the principal.
The draw is that gold bonds will be redeemed in Indian rupees at maturity, with the redemption price based on a simple average of the closing price of 999-purity gold over the previous three business days as reported by the IBJA.