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 bonds, which were issued under the 2017-18 Series-XI, will be redeemed at a price of ₹12,801 per unit. This means that investors who purchased the bonds at the issue price of ₹2,954 per unit will receive a staggering return of around 333%. The RBI has also set the same price for premature redemption of 2019-20 Series I with an issue date of June 11, 2019.
The SGBs were introduced by the government in 2015 as a means to reduce the demand for physical gold and to channelize the savings of individuals into a more productive asset class. The bonds are denominated in grams of gold and are issued by the RBI on behalf of the government. They have a tenure of eight years, with an option to exit after the fifth year.
The December 2017 issue of SGBs was one of the most popular issues, with many investors taking advantage of the opportunity to invest in gold without having to physically hold the metal. The issue price of ₹2,954 per unit was attractive to many investors, who saw it as a good opportunity to diversify their portfolios and hedge against inflation.
Now, with the final redemption price set at ₹12,801 per unit, investors who held on to their bonds will receive a significant return on their investment. The 333% return is one of the highest returns on any investment instrument in recent times, and it is likely to delight investors who had put their money into the SGBs.
The high return on SGBs can be attributed to the significant increase in the price of gold over the past few years. Gold prices have been on an upward trend, driven by a combination of factors such as geopolitical tensions, economic uncertainty, and inflation concerns. The COVID-19 pandemic has also played a role in driving up gold prices, as investors have sought safe-haven assets to park their money.
The RBI’s decision to set the same price for premature redemption of 2019-20 Series I with an issue date of June 11, 2019, is also significant. This means that investors who had purchased the bonds in June 2019 will also be able to exit their investments at the same price, even though they have not completed the full tenure of the bonds.
The high return on SGBs is likely to attract more investors to this asset class. The SGBs offer a unique combination of benefits, including the opportunity to invest in gold without having to physically hold the metal, a fixed return, and tax benefits. The bonds are also exempt from capital gains tax, making them an attractive option for investors who want to avoid the tax liabilities associated with other investment instruments.
In conclusion, the RBI’s announcement of the final redemption price for SGBs issued in December 2017 is a significant development for investors. The 333% return on investment is one of the highest returns on any investment instrument in recent times, and it is likely to delight investors who had put their money into the SGBs. The high return on SGBs is a testament to the attractiveness of this asset class, and it is likely to attract more investors to the SGBs in the future.
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