Series X SGB Program: The Series X gold sovereign bond program opens tomorrow; should I subscribe?

New Delhi: Amid the growing appeal of gold as a safe haven due to geopolitical tensions between Russia and Ukraine, the Sovereign Gold Bond (SGB) Scheme 2021-22 – Series X will open for subscription on Monday February 28.

The Reserve Bank of India (RBI) has set the price at Rs 5,109 per gram of gold. The last tranche of the SGB Scheme – Series X can be subscribed until March 4.

The government will give a rebate of Rs 50 per gram to investors who apply online and payment against the application is made digitally.

“For these investors, the issue price of Gold Bond will be Rs 5,059 per gram of gold,” RBI said.

The central bank issues the bonds on behalf of the Indian government.

The majority of analysts are in favor of subscribing to the issue given the fear of war between Ukraine and Russia and rising inflation around the world. Bullion is considered a hedge against inflation.

Anuj Gupta, Vice President – Commodities and Currency Research, IIFL Securities, suggested investors bid for the latest tranche of the SGB program.

“SGB is a great opportunity to put your money in the yellow metal amid growing geopolitical concerns around the world,” Gupta added. “Rising inflation will also support bullion.”

The issue price of Series IX, which was open for subscription from January 10 to 14, was 4,786 rupees per gram of gold. The Know Your Customer (KYC) standards are the same as for buying physical gold.

The bonds will be sold through Stock Holding Corporation of India (SHCIL) banks, designated post offices and recognized stock exchanges – National Stock Exchange (NSE) of India and BSE.

Sugandha Sachdeva, Vice President – Commodities and Currency Research, Religare Broking said that SGBs are a lucrative option as they offer hassle-free long-term gold investing.

“Given risk sentiments, geopolitical uncertainty and inflation fears around the world, investing in gold bonds might be the right choice,” she said.

A bond is priced in Indian rupees based on a simple average of the closing price of 999 purity gold, published by the India Bullion and Jewelers Association for the last 3 business days of the preceding week. the subscription period.

Launched in 2015, the scheme aims to reduce demand for physical gold and transform part of domestic savings into financial savings while buying the yellow metal.

Kshitij Purohit, Lead – Currency & Commodities at CapitalVia Global Research said gold should not be viewed as a high yielding instrument, but rather as a tool for portfolio diversification.

Gold being a “safe haven” asset plays a vital role in increasing its demand as it protects our portfolio during times of extreme uncertainty, he added. “You need to have a decent percentage of gold in your portfolio because that will cover the positions.”

Bonds are denominated in multiples of grams because one gram is fixed as the base unit. The term of the bond will be 8 years with an exit option after the 5th year to be exercised on the next interest payment dates.

The minimum authorized investment is 1 gram of gold. The maximum subscription limit is 4 kg for individuals, 4 kg for HUFs and 20 kg for trusts and similar per fiscal year (April-March).

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