Holders of gold bonds to reap Diwali bonanza

A potential ₹300-crore Diwali bonanza awaits investors in the first tranche of sovereign gold bonds (SGBs) that took off modestly eight years ago but have since enamoured investors with returns rivalling those of stock markets.

- Ram Sahgal

On 30 November 2015, the Reserve Bank of India (RBI) issued the first tranche of 914 kg of gold bonds on behalf of the government. Of these, investors have so far redeemed 54 kg, leaving around 860 kg outstanding. Now, the bonds are up for redemption, with returns on a par with stocks, if the interest component on these bonds is added to their capital gains.

Against an issue price of ₹2,684 per gram, the current rate of 24-carat gold is above ₹6,100, implying an annualized return of 10.92%. However, to sweeten the scheme, the government has added a simple interest of 2.75% on the issue price. Together, the annualized return works out to 12.99%, according to Amol Joshi, founder of PlanRupee Investment Services.

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