Gold Bond Investors to Get 333% Returns on December 2017 Issue
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 is a welcome boon for investors who purchased these bonds, as they will receive a staggering return of around 333%. To put this into perspective, investors who bought the bonds at ₹2,954 per unit will receive a payout that is more than four times their initial investment.
For those unfamiliar with Sovereign Gold Bonds, they are a type of investment instrument issued by the RBI on behalf of the Government of India. These bonds are denominated in grams of gold and offer investors a unique opportunity to invest in gold without the need to physically hold the metal. The bonds are issued in tranches, and the Series-XI issue, which was launched in December 2017, was one of the earliest tranches.
The Sovereign Gold Bond scheme was launched by the Government of India in 2015, with the aim of reducing the demand for physical gold and encouraging investors to invest in a more paper-based form of gold. The scheme has been successful, with many investors taking advantage of the opportunity to invest in gold without the hassle of storing and insuring physical gold.
The redemption price of ₹12,801 per unit is a significant increase from the issue price of ₹2,954 per unit. This means that investors who held onto their bonds for the full term will receive a return of around 333%, which is a remarkable payout. To give you a better idea of the returns, let’s consider an example. Suppose an investor purchased 10 units of the Sovereign Gold Bond Series-XI issue in December 2017, at a cost of ₹29,540 (10 units x ₹2,954 per unit). At the time of redemption, the investor will receive ₹128,010 (10 units x ₹12,801 per unit), which is a profit of ₹98,470.
The RBI has also set the same price for premature redemption of 2019-20 Series I with an issue date of June 11, 2019. This means that investors who purchased these bonds and wish to redeem them prematurely will also receive the same payout of ₹12,801 per unit.
The high returns on the Sovereign Gold Bond Series-XI issue can be attributed to the significant increase in gold prices over the past few years. Gold prices have been on an upward trend, driven by a combination of factors, including a weak US dollar, geopolitical tensions, and a decline in interest rates. As a result, the value of the gold bonds has increased, resulting in high returns for investors.
The Sovereign Gold Bond scheme has been a popular investment option for many Indians, who have traditionally been fond of investing in gold. The scheme offers a number of benefits, including a fixed interest rate, exemption from capital gains tax, and the option to redeem the bonds prematurely. The scheme also provides investors with a hedge against inflation, as the value of the bonds is linked to the price of gold.
In conclusion, the announcement of the final redemption price of ₹12,801 for Sovereign Gold Bonds under 2017-18 Series-XI is a welcome news for investors who purchased these bonds. The returns of around 333% are a significant payout, and a testament to the success of the Sovereign Gold Bond scheme. The scheme has provided investors with a unique opportunity to invest in gold without the hassle of storing and insuring physical gold, and the high returns on the Series-XI issue are a reflection of the scheme’s popularity.
As the RBI continues to issue new tranches of Sovereign Gold Bonds, investors who are looking to invest in gold may want to consider this option. With the scheme’s fixed interest rate, exemption from capital gains tax, and option to redeem the bonds prematurely, it is an attractive investment option for those looking to diversify their portfolio.
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