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Sovereign gold bond issue to open for subscription on August 31: Here’s all you need to know

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MUMBAI: The sixth tranche of the sovereign gold bond (SGB) scheme 2020-21-will open for subscription on August 31, and is priced at Rs 5,117 per gram.

Analysts are upbeat on the prospects of gold costs in gentle of the present financial scenario as Covid-19 affect continues to linger. Just a few, nonetheless, have expressed issues over the lock-in interval.

Right here is all you need to know concerning the upcoming sixth tranche of SGB scheme:

  1. When does the issue open?
    The SGB scheme 2020-21-Collection VI shall be open for subscription from August 31-September 4.
  2. What’s the issue worth?
    The issue worth for the sixth tranche of the Sovereign Gold Bond Scheme has been mounted at Rs 5,117 per gram, the RBI mentioned in an announcement on Friday. The issue worth for the bonds (sequence V), which have been open for subscription from August 3 to August 7, was Rs 5,334 per gram of gold.

    The nominal worth of the bond is predicated on the straightforward common closing worth [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the final three enterprise days of the week previous the subscription interval.

    The federal government, in session with the RBI, has determined to provide a reduction of Rs 50 per gram lower than the nominal worth to these buyers making use of on-line and the fee towards the applying is made via digital mode.

  3. Who should buy it?
    The SGBs are restricted for sale to resident people, Hindu Undivided Households (HUFs), trusts, universities and charitable establishments.How a lot can one invest?The minimal permissible funding shall be 1 gram of gold and the utmost restrict of subscription shall be Four kg for particular person, Four kg for HUF and 20 kg for trusts and related entities per fiscal (April-March).
  4. The place can I purchase it?
    The gold bond shall be bought by banks (besides small finance banks and fee banks), Inventory Holding Company of India (SHCIL), designated publish places of work and acknowledged` inventory exchanges (NSE and BSE).
  5. What’s the lock-in interval?
    SGBs include a maturity interval of eight years, with an exit possibility after the fifth yr. If an investor is eyeing an exit earlier than the lock-in interval of 5 years, they will at all times get out of the bonds by promoting it on inventory exchanges. The exit possibility could be utilized on curiosity fee dates.
  6. How has the response been in latest instances?
    Indian households have subscribed to a report Rs 3,387 crore price of sovereign gold bonds within the not too long ago concluded fifth sequence for FY21. In quantity phrases, it provides up to 6.35 tonnes. That is by far the best in worth and quantity in any sequence since SGBs have been launched in 2015 as a method of slicing expensive imports of the yellow metallic. Prior to now 5 years, SGBs aggregating to 48.16 tonnes have been issued by the RBI on behalf of the federal government.
  7. Why are SGBs issued?
    The SGB was launched in November 2015 to cut back the demand for bodily gold, and shift part of the home financial savings that have been used for the acquisition of yellow metallic into monetary financial savings.
  8. What are gold costs presently?
    On MCX, October gold futures have been presently quoting at Rs 51,399 per 10 gram. Gold costs have been very risky since hitting report highs of Rs 56,191 on August 7.
  9. What’s the outlook for gold costs?
    The outlook for gold stays promising in gentle of the financial uncertainties due to the Covid-19 pandemic, and analysts are upbeat on the prospects of the yellow metallic within the medium time period.

    “Excessive liquidity, low rates of interest, excessive fiscal deficits, and an anticipated rise in inflation lead to greater gold costs. So, all this works in favour of gold. The outlook for gold is promising for no less than subsequent 2 years,” mentioned Kishor Narne, head of commodities and currencies at Motilal Oswal Commodities.

  10. Ought to I invest?
    Analysts are upbeat on SGBs as an funding possibility, however some have expressed issues over the lock-in interval.

    “Investing in gold has been a fruitful funding this yr as charges have risen over 30 per cent regardless of the autumn in gold costs in the previous few weeks,” mentioned Nish Bhatt, Founder & CEO, Millwood Kane Worldwide.

    US Fed’s relaxed stance on inflation and an prolonged interval of low charges act as a assist to gold costs, Bhatt mentioned.

    “SGB is an efficient means to invest in non-physical gold, whereby an investor doesn’t have to fear concerning the storage of gold as it’s in a Demat kind and there aren’t any native taxes {that a} purchaser wants to pay if shopping for bodily gold,” he added.

    He additionally identified that the funding in SGB comes with an assured 2.5 per cent every year curiosity payable to the investor and there’s a low cost of Rs 50/gm for on-line funding.

    Some felt that whereas SGBs have been profitable, the lengthy lock-in interval was a deterrent.

    “The issue is the lock-in interval. It’s tough to have that lengthy a view as gold is a tactical funding. The liquidity is an issue, as exiting halfway is tough, and returns could also be impacted in that occasion,” mentioned Narne of Motilal Oswal.

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