HomeMoney & FinanceSovereign gold bond issue opens amid Ukraine conflict. Should you subscribe?

Sovereign gold bond issue opens amid Ukraine conflict. Should you subscribe?


Amid Russia-Ukraine war, Sovereign Gold Bond (SGB) Scheme 2021-22 — Series X is going to open on 28th February 2022. The issue price of SGB for the last tranche of FY22 has been fixed at 5,109 per gm, 323 up from Series IX issue price of 4,786 per gram of gold. The Government of India (GoI), in consultation with the Reserve Bank of India (RBI), has decided to offer 50 per gram discount to the applicants applying online and the payment against their application is made through digital mode. According to experts, amid uncertainty caused by Ukraine conflict, one should not miss this opportunity and must subscribe to the issue that will remain for subscription from 28th February 2022 to 4th March 2022.

Giving ‘subscribe’ tag to the latest tranche of Sovereign Gold Bond Scheme; Anuj Gupta, Vice President at IIFL Securities said, “Amid uncertainty caused by the ongoing Russia-Ukraine war, gold price is expected to remain highly volatile. At such time, SGB price of 5,109 per gm can be a good bet for long-term gold investors. If we look at the last 5 years return on gold, it has jumped from near 3,000 per gm to around 5,100 per gm levels, yielding around 70 per cent return to investors. After ascending to its life-time high in 2021, yellow metal prices have remained under the profit-booking heat on every rise in 2021. So, investing for 5 years long period through Sovereign Gold Bond Scheme can be a good bet in current geopolitical uncertainty.” Anuj Gupta of IIFL Securities suggested gold investor to apply for the SGB scheme.

Highlighting the benefit of investing in paper gold; Nish Bhatt, Founder & CEO at Millwood Kane International said, “Moving investment from physical gold to digital/paper gold has been a big success for the government via the SGB, wherein it has raised over 32,000 crores since its inception in 2015. Investing in paper gold (SGBs) is a better and less hectic option as there is no storage cost, making charges in the case of gold jewelry.”

Attracting attention of gold investors towards current global uncertainty, founder & CEO of the Investment consulting firm said, “Gold prices have rallied to more than a year high due to the geopolitical tensions. Historically, gold has attracted investment in times of uncertainty due to its safe-haven nature. The situation in Ukraine has also led to a spike in crude prices. A rally in oil prices put pressure on the Indian National Rupee or INR, thereby making gold more costly. Currently, gold is supported by international as well as local developments. Moving forward, the development in Ukraine and the Fed action will provide direction to most asset classes. But a higher crude price and inflation in India, subsequent pressure on INR will continue to support gold prices in the short to medium term.”

Minimum permissible investment in Sovereign Gold Bond Scheme is 1 gram of gold. The maximum limit of subscription is 4 kg for individuals, 4 Kg for HUFs and 20 Kg for trusts and similar entities per fiscal (April-March).

The RBI issues the bonds on behalf of the Government of India. The bonds will be sold through banks Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges — National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

The Scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings — used for the purchase of the yellow metal — into financial savings.

Price of bond is fixed in Indian rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period.

(With inputs from PTI)



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