Gold bond investors to get 333% returns on December 2017 issue
In a significant development, the Reserve Bank of India (RBI) has announced that the final redemption price of ₹12,801 for Sovereign Gold Bonds under 2017-18 Series-XI with an issue date of December 11, 2017. This news has sent shockwaves of excitement among investors who had purchased these bonds, as they are set to receive a staggering return of around 333% on their investment. To put this into perspective, investors who bought the bonds at ₹2,954 per unit will now receive ₹12,801 per unit, resulting in a massive profit.
The Sovereign Gold Bond (SGB) scheme was introduced by the Indian government in 2015 to reduce the demand for physical gold and to channelize the gold investments into a more productive avenue. The scheme allows investors to buy gold in a non-physical form, with the added benefit of earning interest on their investment. The bonds are denominated in grams of gold, and the investor receives the prevailing market price of gold at the time of redemption.
The 2017-18 Series-XI SGB was issued on December 11, 2017, with a face value of ₹2,954 per unit. The issue price was determined based on the average price of gold for the week preceding the issue date. At the time of issue, the price of gold was around ₹2,800 per 10 grams, and the bonds were sold at a premium of ₹154 per unit.
Fast forward to the present, and the price of gold has increased significantly, with the RBI announcing a final redemption price of ₹12,801 per unit. This means that investors who bought the bonds at ₹2,954 per unit will now receive a return of around 333%, which is an astonishing profit. To calculate the return, let’s assume an investor purchased 1 unit of the SGB at ₹2,954. At the time of redemption, the investor will receive ₹12,801, resulting in a profit of ₹9,847 (₹12,801 – ₹2,954). This translates to a return of approximately 333% (₹9,847 / ₹2,954).
The premature redemption price for the 2019-20 Series I SGB, which was issued on June 11, 2019, has also been set at ₹12,801 per unit. This means that investors who had purchased these bonds can now redeem them at the same price, resulting in a significant profit.
The announcement by the RBI has come as a pleasant surprise for investors, who had been waiting for the final redemption price to be announced. The SGB scheme has been a popular investment option among Indians, who have traditionally been avid investors in gold. The scheme has also helped to reduce the demand for physical gold, which has been a major contributor to India’s trade deficit.
The returns on the SGB scheme are tax-free, making it an attractive investment option for those looking to invest in gold. The scheme also provides a hedge against inflation, as the value of gold tends to increase with inflation. Additionally, the SGB scheme is a more secure and convenient way to invest in gold, as it eliminates the risk of theft and storage costs associated with physical gold.
In conclusion, the announcement by the RBI regarding the final redemption price of the 2017-18 Series-XI SGB is a significant development for investors who had purchased these bonds. The return of around 333% is an astonishing profit, and it highlights the potential of the SGB scheme as a lucrative investment option. As the price of gold continues to fluctuate, investors can expect to receive significant returns on their investment, making the SGB scheme an attractive option for those looking to invest in gold.
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