SGB 2018-19 Series I redemption: How investors earned nearly 5 times their investment

For the Sovereign Gold Bond (2018-19) Series I, the final redemption can be made today. In fact, the RBI auto-credits the due amount without any prior documentation. All the RBI does in this regard is that it sends an e-mail to the subscriber well in advance, and in it the subscriber needs to inform about any changes if made in the registered bank account for crediting the SGB proceeds.

The aforesaid SGB was issued on May 4, 2018, and as per the RBI rules, the gold bonds can be redeemed or are repayable at the end of eight years from the bond issuance date.

The issue for the aforesaid SGB was opened between April 16 and April 20, 2018, and the issue price was fixed at ₹3,114 per gram. For online applications, subscribers were given a ₹50 discount, reducing the effective issuance price to ₹3,064 per gram.

Based on the simple average of the closing price of gold of 999 purity for the three business days, i.e., April 28, April 29, and April 30, 2026, the India Bullion and Jewellers Association Ltd (IBJA) has published the redemption price for this issue as ₹14901 per unit or gram.

The issue will offer investors a return of up to 386 per cent, meaning an almost 5 times return from the investment.

Can you still capitalise on gold’s bull run via SGB investment?

Even though gold has been volatile in the backdrop of the West Asia crisis, most experts are bullish on the long-term prospects of gold. So, if you wish to tap the momentum in gold through paper investment i.e. via the SGB route, you can still buy them from the secondary market.

Importantly, given the sharp run-up in gold, the SGB route has turned out to be an expensive borrowing route for the Centre, resulting in the halt in its issuance.