The issue price of gold bond (tranche-II) is declared. It is ₹2600/ gram. Within 2 months government came with another issue of the sovereign gold bond scheme. The second tranche of the gold bond is open from 18 Jan 2016 -22 January 2016. You have only five days to subscribe the gold bond. The first tranche of the gold bond was open for 15 days. But, this time, you have less time.
How Issue Price of Gold Bond is Fixed
The issue period of the gold bond is reduced to mitigate the gold price fluctuation effect. Indeed, last time gold bond could not attract too many people because of the gold price slip in the open market. Since the issue was open for two weeks, the slide in the gold price was almost 2%. Because of this slide in price, the gold bond became unattractive. As the issue price of gold bond was fixed much earlier.
The issue price of gold bond is fixed on the basis of last week gold price. It is the average of closing gold price of last week. In the second tranche, the closing price was from 11 Jan 2016- 15 Jan 2016. The gold rate is taken from Indian bullion and jewelers association.
What is Sovereign Gold Bond Scheme
The sovereign gold bond scheme is a noble initiative of the government of India. This scheme is designed to reduce the purchase of physical gold at the same time giving you the benefit of gold.
Too much of Indian money is spent on the import of gold. We don not produce a single gram of gold. but, we are the second largest gold importer and have the largest gold deposit in the country. To save the precious dollars the government is trying to reduce the consumption of gold.
The gold bond scheme is made to reduce the gold purchase for investment. Along with the jewelry, people buy gold for the investment as well. It is considered the inflation proof investment. The gold bond scheme is made for the gold investor not to replace the demand of jewelry.
The gold bond scheme would always give you far better return than physical gold. The price of the gold bond is linked to the rate of physical gold in the Indian market. The price of the gold bond will increase or decrease along with the market rate of gold. At the time of maturity, you would get the current gold price for your bond. Along with the linked price, you would get extra 2.75% interest per year.
It means you would always get extra 2.75%/ year return than the physical gold. For the gold investor, it is a win-win situation. I never recommend to invest in gold, but I myself would prefer the gold bond. Because it is not going to harm the economy of our country. Neither my money would get blocked in physical gold. Rather my gold bond investment would be used for public infrastructure.
I have written a comprehensive post about the features, interest rate, benefits and comparison of gold bond with other investment. You must read the post to understand this golden investment.
How to Buy Gold Bond
Gold bond is widely available. You can buy it from your nearest post office or bank. All the scheduled bank (except cooperative and regional banks) sell this bond. Go to the branch of your bank and ask for the gold bond scheme. Every branch of a scheduled bank can take the application of gold bond scheme. The bank would tell you the issue price of the gold bond, you have to pay accordingly.
Hence, there should not be a problem for the subscription. Keep in mind that KYC formalities are required for gold bond investment. Thus, you must carry the Identity proof, address proof, PAN copy and photograph while you visit the bank or post office.
My Take
The gold bond scheme is the best alternative of physical gold. If you believe in the value of gold, you must shift to the gold bond scheme because it is valuable than gold itself. By investing in the issue of the sovereign gold bond scheme, you would also help your country to grow. The issue price of gold bond is also reasonable, which can give you better gains in future.