New Sovereign Gold Bond Series opens today: How & where to apply

The Reserve Bank of India is launching the latest tranche of sovereign gold bonds (SGB). The subscription - titled Sovereign Gold Bond Scheme 2023-24 Series I - will be open to the public from today (June 19) to June 23, 2023.

In this case, you can apply for a minimum one gram of gold for Rs 5,926.

You'd get an additional Rs 50 per gram discount if you purchase online.

The next instalment of this series will be available between September 11 and 15, 2023.

How and where to apply

Offline
This series of sovereign gold bonds (SGB) is available at most commercial banks and post offices.

You'll have to produce your KYC documents (Aadhaar and PAN card)

Online
You can visit the website of your bank.

And like we said earlier, you'd get a discount of Rs 50 per gram from the issue price if you apply for SGB online and pay for it digitally.

Should you invest
We do not recommend gold as an investment.

Its long-term (10-year) performance is in single digits and grows your wealth at almost half the pace compared to equity. The graph below is a testament to that.

But if you have decided to invest in gold because it is as a hedge during uncertain times, we'd say sovereign gold bonds are the best way to buy gold.

Here's why?

• SGB is backed by the government of India, which means it is very safe.
• SGB is superior to all other forms of gold because it provides a guaranteed 2.5 per cent interest rate each year. This is over and above the appreciation in the price of gold. However, the interest you earn each year is taxed.
• SGB is paper gold. It means the cost of ownership is very low. By contrast, buying physical gold can be stressful as you'd need to find a safe locker. Gold ETFs, too, have an expense ratio of around 1 per cent.
• With SGB, you don't pay any capital gains tax if you hold your investment until maturity, which is eight years. For example, let's say you buy the current series of SGB today and hold it for eight years, the gains you make on your investment will not be taxed.

There's one downside, though. In SGB's case, there is a liquidity issue in the first five years because you may not find many buyers on the stock exchange.

However, this problem vanishes from the sixth year onwards, as you can get your SGB encashed from the RBI directly.

Suggested read: How to buy and sell sovereign gold bonds (SGBs)?