This November, the investors of SGB Series III will experience significant returns. Investors can see a 159 per cent value increase in eight years. As per the Reserve Bank of India, the redemption rate has been fixed at Rs 7,788 per unit based on the current price of gold and is thus way above the issue price at Rs 3,007 per gram. The SGB programs are seen as quite successful; they offer an option to invest directly in gold with promising returns; it provides one with value via appreciation in gold prices that keep a stable growth trajectory.
Another among the SGB series is the SGB 2016-17 Series III bond, issued by RBI on behalf of the Government of India. This too carries an annual rate of 2.50 per cent, to be paid semi-annually. The last interest instalment payable goes along with the redemption of the principal amount. This series' bonds have a maturity period of eight years, and the redemption date is fixed on November 16, 2024. The RBI has recently declared the final redemption price in an official press release as a simple average of gold's closing prices from November 4 to November 8.
Sovereign Gold Bonds are government securities issued in units in terms of grams of gold. Therefore, they offer a safe and accessible route for those looking to invest in gold with an investment that can potentially convert into the precious metal itself at maturity. Unlike holding physical gold, SGBs carry no risk or cost relating to storage and security and also generate periodic interest income. At maturity, investors receive back their principal amount with returns pegged to the prevailing gold prices, therefore having exposure to the appreciation of the value of gold over time.
The issues were priced at the India Bullion and Jewellers Association Limited published gold rates prevailing during the week prior to the issue in November 2016. As with any other SGB issue, the scheme forms part of the government's plan to reduce dependence on imported gold and provide citizens with a safe, higher-return investment option.
The appreciable rise in the value of the SGB 2016-17 Series III bonds identifies the attraction of the scheme to investors in search of long-term investment with minimal risk and tied to gold. In combination with capital appreciation and steady interest gains, SGBs have turned into one of the most prominent financial tools, especially during unstable market conditions globally. For the SGB 2016-17 Series III investors, November redemption will not only prove to be rich return but also a validation of the security and profitability SGBs are trying to provide Indian investors.
