India’s Reserve Bank sells government gold at ₹5.117 per gram in the latest tranche of government bonds in gold.

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RBI will issue the sixth tranche of the Gold State Bond from Monday (today) to September 4.
Investors who file an application against a local application will receive a discount of ₹50 per gram.
The government bonds are restricted for sale to individuals, HUFs, trusts, etc.

The Reserve Bank of India (RBI) accelerated the speed at which investors can invest in the sixth tranche of the government bond. This step comes a few days after RBI started its special market operation of buying and selling government securities simultaneously.

RBI’s sale of gold begins on Monday (today) and ends on September 4. The India Bullion and Jewelers Association stated that the nominal price of the bond is based solely on the simple average closing price.

Investors will benefit from investing in government gold until the bonds mature

Investors who apply online using the digital mode are eligible to receive a discount from ₹50 per gram, which means that they will only buy gold at ₹5,067 per gram. At the moment the value of gold on the futures market is ₹51,208 per 10 grams. However, only RBI issues state gold on behalf of the Indian government.

said Nish Bhatt, founder and CEO of Millwood Kane International:

“Investing in gold has been a profitable investment this year as interest rates have risen by over 30% despite the fall in gold prices in recent weeks”.

He explained,

“A gold government bond is an effective way to invest in non-physical gold, where an investor does not have to worry about storing gold because it is in demat form, and there are no local taxes that a buyer must pay when buying physical gold. An investment in SGB carries a guaranteed interest rate of 2.5% p.a. payable to the investor and there is a discount from ₹50/gm for online investments”.

Bhatt added this further,

“The US Federal Reserve signals a relaxed attitude towards inflation, a prolonged period of low interest rates acts as a support for the gold price. In view of the measures taken by the US government regarding the next economic stimulus package, the development of the US dollar and the way governments worldwide control the virus will determine the price of gold”.

It is important to note that the sale of government bonds to individuals, Hindu undivided families (HUFs), foundations, universities and charities is limited.

Gold bonds will be sold through banks (except small financial and payment banks), the Stock Holding Corporation of India (SHCIL), certain post offices and recognized stock exchanges (NSE and BSE).

The government bond gold project was first issued in November 2015 to reduce the demand for physical gold and redirect domestic funds used to purchase gold into financial savings.

As things stand today, investing in government gold is profitable for investors until the bonds mature.

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