The Reserve Bank of India (RBI) on Friday announced the premature redemption rate of Sovereign Gold Bond (SGB) 2017-18 Series-XIII. In this, investors got a return of about 382 percent.
According to RBI, SGB 2017-18 Series-XIII issued on December 26, 2017 can be redeemed prematurely at Rs 13,563 per gram. The maturity period of SGB is eight years and investors can either redeem prematurely or hold it after completion of five years.
SGB 2017-18 Series-XIII was issued at Rs 2,866 per gram (without discount) and premature redemption would fetch investors a return of 381.6 per cent.
This return is in addition to the annual interest of 2.5 percent available on SGB. If this is also included then the returns of SGB increase significantly.
SGBs are government-backed securities whose value is equal to a gram of gold. These are seen as a digital alternative to holding physical gold. These are linked to gold and as the price of gold increases, their prices also increase.
There is also no capital gains tax if SGB is held till maturity or for five years.
Gold has seen a tremendous rise in the last few years. The reason for this is the cut in interest rates by the US Fed, uncertainty over US tariffs, geopolitical tensions and increased buying in gold and silver ETFs.
Experts say that further increase in gold prices may be seen. The reason for this is geopolitical tension and the decline in the credibility of the US dollar.
Gold prices remain at all-time high in international markets. Till the time of writing the news, the price of gold on Comex has increased by 0.73 percent to $ 4,536 an ounce.
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