Sovereign Gold Bond Scheme 2017-2018 Series 1 by RBI

Q.  What is the issue prize for the Sovereign Gold Bond Scheme 2017-2018 series I?
- Published on 24 Apr 17

a. INR 2901 per gram of gold
b. INR 2801 per gram of gold
c. INR 2901 per gram of silver
d. INR 2801 per gram of silver

ANSWER: INR 2901 per gram of gold
The Sovereign Gold Bond Scheme 2017-18--Series I will be opened for subscription from 24 to 28 April, 2017. The bonds will be issued on 12 May.

The issue price of the bond is based on the simple average closing price (published by the India Bullion and Jewellers Association) for gold of 999 purity of the week preceding the subscription period.

It works out to be INR 2,951 per gram.

However, the government, in consultation with the RBI, has decided to offer a discount of INR 50 per gram on the nominal value of the Sovereign Gold Bond.

Hence, the issue price of gold bond for this tranche has been fixed at INR 2,901 per gram of gold.

The bonds would earn an interest of 2.75% per annum, payable every six months on initial investment.

The tenor of the bond will be for a period of 8 years with exit option from fifth year to be exercised on the interest payment dates.

The minimum investment limit into these bonds is one gram of gold, while the maximum amount subscribed by an entity cannot be more than 500 grams per person per fiscal year

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

Given that the short-term outlook for gold looks promising, investors can hope to make tidy gains on the interim rally as well.

Investors who are looking for investing in gold can go for sovereign gold bonds.

These bonds are issued by the Government of India and offer returns linked to gold price.

Investors will also get a coupon of 2.5 per cent per annum.

The capital gains you make by investing in these bonds is tax exempt, provided you hold them till the end of the tenure of eight years.

Exit, though, is allowed from the fifth year through the secondary market. But this will result in capital gains tax of 20 per cent (with indexation benefit).

Interest on these bonds - a promised 2.5 per cent rate - will be paid semi-annually.

The other paper form of gold - Gold ETFs - has the disadvantage of higher costs.

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