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Sovereign Gold Bond First Issue at Rs.2684 per gram

As you may be aware, the Govt. desires to switch people buying gold, from the physical form to the paper form. 

In this regards, it had earlier announced the broad aspects of the Sovereign Gold Bond, to be issued in tranches from time to time [See : My name is Bond... Gold Bond].

Now comes the announcement of the first issue of the Sovereign Gold Bonds by RBI on behalf of the Govt. of India.

Listed below are the broad features of the same:

Application acceptance dates : Nov 5 to 20, 2015 (issue can be closed earlier also)

Issue Date : November 26, 2015

Bond Issue Price : Rs.2684 per gram
[Based on the previous week’s (Mon Oct 26 to Fri Oct 30, 2015) simple average of closing price of gold of 999 purity published by IBJA (India Bullion and Jewellers Association Ltd.)]

Interest Rate : 2.75% payable half-yearly on the initial vale of investment

Tenor / Maturity : 8 years from Nov 26, 2015

Minimum investment : 2 grams of gold i.e. Rs.5368

Maximum investment : 500 grams per person per financial year (based on self-declaration) i.e. Rs.13.42 lakhs

Say no to Gold Jewellery. Bond with the Sovereign Gold Bond.

Eligibility : Resident Indian entities only (Individuals, HUFs, Trusts, Universities, Charitable Institutions)

Denomination : Multiples of grams of gold (basic unit - 1 gram)

Joint application : Yes (the limit of 500 gms applies on the first applicant)

Nomination facility : Available

Availability : Banks and Designated Post Offices

Premature redemption : From the 5th year onward (only on interest payment dates)

Bond Redemption Price : Based on the previous week’s (Mon–Fri) simple average of closing price of gold of 999 purity published by IBJA (India Bullion and Jewellers Association Ltd.)

Form : Govt. of India Stock/Holding Certificate (can be converted into demat form)

Collateral : Eligible for loans. Loan-to-Value same as specified by RBI for physical gold loan.

KYC : Same documentation as for physical gold

Tax : Interest taxable, but (thankfully) no TDS. Capital gains taxation same as for physical gold.

Trading : Tradeable on the exchanges (w.e.f. the date as notified by RBI)

Commission : 1% of the subscription amount to be paid as commission to the distributors

I reiterate my opinion on the Govt's Sovereign Gold Bond Scheme...

... If you are planning to buy physical gold for investment, don't!

... There is no extra income in keeping jewellery, bars or coins.

... When you are always on the lookout for extra 1-2% interest on your fixed deposits, why not earn 2.75% extra income on your gold investment - that too absolutely risk-free.

... A piece of paper / electronic gold is lot safer than storing physical gold.

... No risk of impurity and no (wasteful) making charges

... Curbing import of gold will benefit the economy, which in turn would benefit you.

... Don't go overboard with your investment in gold; there are better investments that you mustn't ignore.

NOTE: For various forms (Form A to Form F) you can refer to RBI's press release on Sovereign Gold Bond 2015-16.

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