New Delhi — Investors in a 2019 tranche of Sovereign Gold Bonds are sitting on gains of more than four times their original investment after the Reserve Bank of India set the premature redemption price at Rs 15,310 per unit.
The redemption applies to Sovereign Gold Bond 2019-20 Series III, issued on Aug. 14, 2019, and is available from Aug. 14, 2026.
For investors who bought the bonds online at the discounted issue price of Rs 3,449 per gram, the new redemption price represents an absolute gain of Rs 11,861 per unit, or about 343.9%, excluding interest earned during the holding period.
The RBI calculates the redemption price using the simple average of the closing price of 999-purity gold for the three business days preceding the redemption date. For this tranche, the calculation was based on gold prices published by the India Bullion and Jewellers Association for Aug. 11, 12 and 13.
An investor who put Rs 1 lakh into the bonds at the online issue price would have received about 28.99 units. At the latest redemption price, those holdings would be worth roughly Rs 4.44 lakh, representing a gain of about Rs 3.44 lakh before interest.
The increase in redemption value works out to an annualized return of about 23.7% over the seven-year holding period.
Investors also received fixed annual interest of 2.5% on their original investment, paid twice a year. That income is separate from the appreciation in the value of gold.
Sovereign Gold Bonds carry an eight-year maturity, although investors are permitted to redeem them early after the fifth year on specified interest payment dates. (Source: IANS)
