Sovereign gold bonds back in favour
By Rajesh Bhayani
Sovereign gold bonds (SGBs) issued by the Reserve Bank of India has seen a record purchses by investors in the month of September. In fact the September tranche, the second in the current financial year, has seen a purchases of 11.67 tonnes worth of bonds at a high price of Rs 5,923 per gram — the highest so far in the 65 tranches held since November 2015.
The scheme was launched to give a financial instrument to invest in gold and reduce import of physical gold. The 8-year maturity issue gives 2.5% per annum on the issue price and capital gain exemption. The June 2023 issue of SGB purchases was also 7.76 tonnes. In total, 19.4 tonnes of SGBs have been bought till now in FY 23 vis a vis over 12 tonnes in the full year of 2022-23 (and 19.8 tonnes in 21-22). Clearly, the demand for SGBs has made a strong comeback.
“SGBs is now an important avenues for gold investors as and when tranches open (buying bonds from stock-secondary market is tough as it is not liquid). They were waiting to invest. Investing in a new tranche gives them discount of Rs 50 per gram if invested through digital banking as well. Another factor that has contributed to increased response to bonds is that prices have corrected and investors found that it will not fall further and are at lucrative levels,” said Chirag Sheth, Principal consultant for a London headquartered Metal research firm, Metal Focus.
The response to gold bonds were very good in 21-22 and 20-21 but that was considered good because of lockdown effect. However, the response this time is a suggesting that bonds are back in favour. With the two issues of FY24, total net investment in SGBs outstanding is 120.6 tonnes. Of these over half of the bond purchases were seen
