Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial

Video: Demystifying the Sovereign Gold Bond Scheme

Today we speak of the Sovereign Gold Bond Scheme where the Government Will Sell You Gold!

No, actually the government will sell you a bond that looks and behaves exactly like Gold, but it’s not actual gold. We spoke of it as a SoBoGoS scheme, where we added a lot of snark to explain the concept.

Read: What is the SoBoGoS Scheme?

Now we finally have a notification from the RBI about what this scheme really is:

  • Buy The Gold Bond From Banks or Post Offices: Current Tranche open between Nov 5 and Nov 20, 2015.
  • Min 2 grams, Max 500 grams, multiples of 1 gram
  • Get a Holding Certificate
    • Can be dematerialized
  • In Tranches, not on Tap
  • Pay according to prev week’s average price of IBJA gold
  • Interest of 2.75% on invested money, half of that every six months
  • Redeemed after 8 years
    • After five years, can be redeemed on interest payment dates, twice a year
  • Can take loans
  • Tax as per LTCG like real gold
  • Apply – banks, post office etc.
  • No NRIs, Foreigners, Companies

Stop! Can’t You Explain Better?

Of course, which is why we have a video:

Do let us know what you think!

  • ]{umar says:

    Gold ETFs and MF’s will be in trouble.

  • Kaushik says:

    Who is going to trust this scheme when you have Sahara, inflation and various types of scams going around unchecked. The ones with some grey matter will have the real one and stuff it in a safe place. That’s Indians have done with ages and that’s what they are going to do.

  • Good video. The risk is sovereign, but this is not same as ‘no risk’. The government’s liability is denominated in Gold, not in Rupees which can be printed. More importantly, a simple administrative circular can stop you from withdrawing your investment or impose a new tax which nullify your returns. We are seeing this happen with investments like our EPFO deposits, where changes are being proposed to withdrawal conditions after investments are made. When lending to government, risk of post-facto changes to the rules of the game is very high. My money is safer with me than with the government.