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Sovereign Gold Bond (SGB) 2023-24 (Series III) priced at 6199: Who Should Invest?

Sovereign Gold Bond (SGB) 2023-24 (Series III): know all the details about it to decide if you should invest.

Sovereign Gold Bond (SGB) 2023-24 (Series III) priced at 6199: Who Should Invest?


Posted on 16 Dec 2023
Author: Sayan Sircar
Tags: Tags Gold
9 mins read
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Sovereign Gold Bond (SGB) 2023-24 (Series III): know all the details about it to decide if you should invest.

Sovereign Gold Bond (SGB) 2023-24 (Series III) priced at 6199: Who Should Invest?

📚 Topics covered:

This article is a part of our detailed article series on the new issues of Sovereign Gold Bond (SGB) as well as maturity of existing SGBs. Ensure you have read the other parts here:

What is a Sovereign Gold Bond?

A Sovereign Gold Bond (SGB) is a piece of paper issued (in digital form) by the Government of India with the following features. For every unit of SGB purchased, the investor will:

  • buy it when issued at the current price of 1 gram of gold
  • get 2.5% interest (paid as 1.25% every six months; fully taxable at slab rates) on the invested amount
  • get back money as per the prevailing price of gold in eight years. Money received may be higher or lower than the purchase price and cannot be predicted in advance
  • if desired, sell it via the stock exchange five years after issuance
  • there are no capital gains taxes if held until maturity for eight years. Else, you will need to pay taxes based on the holding period

To know more about SGB as an investment, please read this list of detailed SGB-related FAQs: Frequently asked questions on Sovereign Gold Bonds (SGB): the complete guide.

What is Sovereign Gold Bond (SGB) 2023-24 (Series III)?

SGB is issued by the RBI periodically. This particular series or tranche is called Sovereign Gold Bond (SGB) 2023-24 (Series III). These are the details of this particular series

  • Subscription period: December 18 – December 22, 2023
  • 1 unit of SGB is priced at the average closing values of the IBJA website 1gm of 999 purity gold rate from the last 3 working days of previous week
  • Offer price: ₹6199 per gram
  • Retail discount: ₹50 per unit of SGB for online application and digital payments
  • Price per unit for online subscription: ₹6149
  • 2.5% annual interest (paid at the rate of 1.25% on ₹6199 every 6 months) will be received per unit. This interest is taxable
  • The bond matures on Dec-2031. The maturity proceeds will be tax-free
  • SGB can be purchased only by resident Indians but not by NRIs

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What is the price per gram of Sovereign Gold Bond (SGB) 2023-24 (Series III)?

1 unit of Sovereign Gold Bond (SGB) 2023-24 (Series III) is priced at ₹6199. Price for online subscription with digital payment is ₹6149 per unit.

The complete press-release is available here.

How to purchase Sovereign Gold Bond (SGB) 2023-24 (Series III)?

SGB is offered for purchase via most banks, post offices, stock exchanges like NSE/BSE (a demat account is needed) or via the Stock Holding Corporation of India Ltd (SHCIL).

If you have not invested in this tranche via the options above, you can buy SGB from the secondary market i.e. the stock exchange: How to buy SGB from the stock market?.

NRIs cannot invest in SGB.

Also read
Who should invest in target maturity debt funds?

Does SGB give good return?

SGB gives you the exact return of gold price movement (as measured by the IBJA rate of 999 purity gold) that too tax-free plus 2.5% interest.

There are 3 main ways of buying gold in India:

Of these three options, SGB gives the highest return in case you buy gold as SGB: The Ultimate Guide to Which Type of Gold Gives the Best Returns.

The actual return from holding SGB will depend on the price of gold on the maturity date 8 years later and is completely unpredictable. RBI will guarantee that if you invest ₹6199 in this tranche today, you will get the 6-monthly interest but the money you will get will on maturity depend again on the IBJA gold rates at that time.

Related:
Budget 2024: Should you still invest in SGB after Gold import duty cut?

Historically, gold has returned over 9% a year in India since the 1950s. This means that the price of gold has essentially doubled every 8 years as per the Rule of 72. Since we import most of our gold, the domestic price of gold has fluctuated a lot due to Rupee depreciation against the US Dollar over the decades. Over the years, the average 8-year gold price return has been around 10%. SGB gives a slight interest and is therefore the only option to invest in Gold with the highest possible return.

Here is a complete history of gold price in India: A complete history of gold prices in India since the 1950s.

To understand better about whether SGB is right for you:

Who should purchase SGB?

We see the following use cases for purchasing SGB:

  • if you are accumulating gold for making jewellery on a later date: instead of buying physical gold, you can buy SGB that matures around the time you plan to buy jewellery
  • if you are planning to invest in gold as a part of portfolio diversification purpose: as we have argued in this article on adding gold to a portfolio, a small amount of gold added to a portfolio of stocks and bonds has diversification benefits
  • if you are looking for a low cost way to get exposure to gold as an asset class: since SGB is a purely digital instrument, guaranteed by the government, and offers the highest return of all the other types of buying gold

How does this SGB issue price compare with the previous series prices?

The complete SGB price history in India is here:

SGB Complete Price History In India

The complete details of all SGB issued so far are available here: Sovereign Gold Bond (SGB): complete issue price history in India.

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This post titled Sovereign Gold Bond (SGB) 2023-24 (Series III) priced at 6199: Who Should Invest? first appeared on 16 Dec 2023 at https://arthgyaan.com


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