InvestorQ : What are the essential features of the Sovereign Gold Bond scheme of RBI?
Chandralekha Desai made post

What are the essential features of the Sovereign Gold Bond scheme of RBI?

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Dawn Cherian answered.
1 year ago
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The gold bonds are issued periodically by the RBI and are sold through the various banking channels as well as the post offices and other authorized agents. The gold bonds are denominated in grams of gold (normally 10 grams) and the price of the gold bond issue is determined at the time of each tranche based on the average price. The price is normally fixed by the RBI slightly lower than the prevailing market price at a discount purely to make it attractive to the buyers. Additionally, the bonds are denominated in grams of gold so that the actual holding does not changing. What changes is the value of the gold bond holdings as that fluctuates with the market price of gold. Effectively, this is exactly like holding physical gold and participating in the price movement without the hassles of storage and conversion of form. Of course, in addition you also earn an annualized interest of 2.5% on the face value of the gold bonds held.

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