The gold bond scheme falls in the debt fund category that the Central Government introduced in 2015 as an alternative to buying physical gold items.
Technically, Sovereign Gold Bonds are part of the Government securities calculated in grams. Here investors pay the issuance price in cash and redeem the bonds in cash on maturity.
Individuals should know that less vulnerability towards market fluctuations and risks makes these bonds a secured investment tool.
The Central Government issues the time frame or window of these secured bonds. Depending on one’s capability, individuals can decide whether to invest in a gold bond.
However, authorities will issue gold bonds in the investor's name during the period.
The Government releases the gold bond issuance date every two to three months with a one week window. Interested investors can subscribe within this period.
One should know that the maturity period on Sovereign Gold Bonds is eight years. They have the flexibility to exit this bond after five years.
The five-day window to purchase the gold bonds opened on 29th November 2021. The digital platform to buy the gold during the eighth tranche will close on 3rd December 2021.
However, the Sovereign Gold Bond 2022 will be issued in four tranches from October 2021 to March 2022. In this scheme, the Reserve Bank of India will issue bonds concurrent with the market price of gold.
This issue price stands at ₹4,791 for a gram. At the same time, there will be a discount of ₹50 per gram of gold for individuals who subscribe and pay online.
Let’s check the objective behind releasing these gold bonds. This will help understand the concept better.