Gold Bond Investors to Get 333% Returns on December 2017 Issue
In a significant development, the Reserve Bank of India (RBI) has announced the final redemption price for Sovereign Gold Bonds (SGBs) issued in December 2017. The SGBs, which were issued under the 2017-18 Series-XI, will have a final redemption price of ₹12,801 per unit. This price applies to bonds with an issue date of December 11, 2017. For investors who purchased these bonds at the time of issue, this translates to a staggering return of approximately 333% over the five-year period.
To put this in perspective, investors who bought the SGBs at the issue price of ₹2,954 per unit will now receive ₹12,801 per unit upon redemption. This significant increase in value is a testament to the performance of gold as an investment asset class. The SGBs were introduced by the government as a way to encourage investors to buy gold in a non-physical form, reducing the demand for physical gold and thereby reducing the country’s gold imports.
The Sovereign Gold Bond scheme was launched in 2015, with the objective of reducing the demand for physical gold and shifting a part of the domestic savings, used for the purchase of gold, into financial savings. The scheme has been successful in achieving its objective, with thousands of investors participating in the various tranches of SGBs issued over the years.
The RBI has also set the same price of ₹12,801 per unit for premature redemption of SGBs issued under the 2019-20 Series I, which had an issue date of June 11, 2019. This move is expected to provide liquidity to investors who may need to exit their investments before the maturity date.
The SGBs offer several benefits to investors, including a fixed interest rate of 2.5% per annum, payable semi-annually. The bonds also provide a hedge against inflation, as the value of gold tends to increase with inflation. Furthermore, the SGBs are exempt from capital gains tax, making them an attractive option for long-term investors.
The significant returns on the December 2017 issue of SGBs are a reflection of the strong performance of gold as an investment asset class. Gold prices have been on an upward trend over the past few years, driven by factors such as geopolitical tensions, economic uncertainty, and inflation concerns. As a result, investors who had invested in SGBs have seen their investments appreciate significantly in value.
The announcement of the final redemption price for the December 2017 issue of SGBs is expected to boost investor confidence in the scheme. The significant returns on offer are likely to attract new investors to the scheme, while also encouraging existing investors to hold on to their investments.
In conclusion, the RBI’s announcement of the final redemption price for the December 2017 issue of SGBs is a significant development for investors. The returns on offer are substantial, and investors who had invested in the scheme are likely to be pleased with the performance of their investments. The SGB scheme has been successful in achieving its objective of reducing the demand for physical gold and promoting financial savings. As the scheme continues to evolve, it is likely to remain an attractive option for investors looking to diversify their portfolios and hedge against inflation.
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