Sovereign Gold Bond’s Last Tranche Opened For Subscription

The 12th and the last tranche of the Sovereign Gold Bond (SGB) for 2021 opened for subscription on Monday, March 1, 2021. The issue will remain open till Friday, March 5, 2021. The SGB is priced at Rs 4,662 per gram. Investors applying online will get a discount of Rs 50 per gram and it will be priced at Rs 4,612 per gram for them.

Investors will be paid interest at the rate of 2.50 per cent per annum on the amount of initial investment. It shall commence from the date of its issue and is payable every 6 months. The date of allotment fixed is March 09, 2021

The minimum quantity investors can bid for will be 1 gram and multiples thereof, the maximum limit of a bid shall be 4 KG for individuals, 4 Kg for HUF, and 20 kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained from the bidder. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market.

Nish Bhatt, Founder & CEO, Millwood Kane International - an investment consulting firm, said, “Investment in paper gold is the best and the most effective way of investing in the yellow metal. Gold should have an allocation of 5-20 per cent of any portfolio depending on the risk appetite.”

Gold prices have been falling since the news of an effective vaccine was reported, as it has ignited hope that the rising number of cases will be arrested and the pandemic will end soon. Gold prices have fallen to hit an 8-month low on rising US Treasury yield, appreciating dollar, and global economic recovery. Moving forward, treasury yield, dollar movement, and the pace of economic recovery worldwide will guide gold prices.

Gold prices have been on a downward spiral for the past two months. In the last one month, the prices have dropped nearly 6.3 per cent. As a result, the prices of the SGB issue have also been adjusted accordingly. The previous gold bonds, which were available for subscription from February 1 to February 5, 2021, were priced at an issue price of Rs 4,912 per gram of gold – around 5 per cent higher than the current issue that closes March 5. The demand for the yellow metal, too, has been hit for reasons mentioned earlier. 

Gold demand in India in 2020 hit a 25-year low of 446 tonnes as compared to 690.4 tonnes in 2019, World Gold Council (WGC) data show. The last time the demand hit such a trough was in 1995 at 462 tonnes. Total jewellery demand, too, slipped 42 per cent at 315.9 tonnes in CY20 as compared to 544.6 tonnes in 2019.