The new series of the Sovereign Gold Bond (SGB) Scheme opened for subscription on Monday. This is the third tranche in FY20 and the subscription closes on August 9. "The issue price of the Bond during this subscription period shall be Rs 3,499 per gramme with settlement date August 14, 2019," the finance ministry said in a statement.
The nominal value of the bond is based on the simple average closing price for gold of 999 purity as published by the India Bullion and Jewellers Association Ltd (IBJA) over the last three business days of the week preceding the subscription period (July 31 to August 2, 2019). The series coincides with a spike in the yellow metal's prices. Gold prices surged Rs 800 to hit an all-time high of Rs 36,970 per 10 gram at the bullion market on Monday.
The weak global economic outlook amid escalating US-China trade war tensions, a feeble US dollar and downbeat Asian equities lifted the metal's safe haven appeal for investors and, in turn, pushed up prices. Analysts believe gold as an asset class should constitute anywhere between 5-15 per cent of the total investment portfolio, depending on the macroeconomic outlook.
The SGB scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings into financial assets. "The market in physical gold being extremely liquid, many people prefer using it. But investing in gold through financial instruments such as gold ETFs and gold bonds is more efficient and convenient for investors," said Vishal Jain, Head ETF, Reliance Nippon Life AMC.
Here are 10 things to know about the SGB scheme:
(Edited by Sushmita Choudhury Agarwal)
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