What is the concept of sovereign gold bonds? How do they work? Anyone who has good knowledge about bonds?
Sovereign Gold Bonds were one of my favourite ways to invest in gold without actually buying the metal.
This is how they used to work:
- The RBI issued these bonds a few times every financial year, usually in small batches or tranches.
- We bought them through banks, brokers, post offices or even online platforms.
The best part about buying online was a discount of ₹50 per gram!
- When I invested, I could choose how I wanted to hold the bonds. It was done physically, digitally or via my demat account.
I could later request to convert it into a demat format.
- Once my application is approved, the bank would send me a certificate of holding, usually within 15–30 days.
I earned 2.5% annual interest on my investment!
When the bond matured after 8 years, I got the current market value of gold. Plus, on holding it till maturity, my capital gains were completely tax-free.
So really, SGBs let me own gold, earn interest and skip the hassles of storage all in one go.
Unfortunately, you can no longer buy these bonds directly from the government, as the scheme has been discontinued by the Union government.
But you can buy existing SGBs from the secondary market on stock exchanges.