Sovereign Gold Bond series 2 opens for subscription: How to buy, comparison with other gold forms and more

Investors eyeing gold as an avenue for investment have an opportunity as the second tranche of the Sovereign Gold Bond (SGB) scheme for 2023-24 opened for subscription on Monday, September 11. This subscription window will remain open until Friday, September 15, providing a limited-time chance to invest in this government-backed scheme.

The issue price for this tranche has been firmly set at Rs 5,923 per gram of gold. However, those opting for online subscriptions can benefit from a Rs 50 per gram discount, making it an attractive proposition for tech-savvy investors.

Sovereign Gold Bonds are denominated in grams of gold and serve as an alternative to physical gold ownership. Launched in November 2015, the primary aim of this scheme is to curtail the demand for physical gold and encourage savings to flow into financial assets, further strengthening India's financial infrastructure.

One of the standout features of the Sovereign Gold Bond Scheme for 2023-24 is its tenure, which extends for eight years. Additionally, investors have the option of premature redemption after the fifth year, a flexibility that can be exercised on the date of interest payment.

The investment limits are structured to accommodate various investor profiles. The minimum investment starts at just one gram of gold, making it accessible to a wide range of individuals. At the upper end, individuals can subscribe to a maximum of 4 kg, while HUFs can also invest up to 4 kg, and trusts and similar entities enjoy a higher limit of 20 kg per fiscal year.

What makes SGBs especially appealing is their fixed interest rate of 2.50 percent per annum, paid semi-annually on the nominal value. Experts believe that these bonds cater to both conservative and aggressive investors.

These bonds can be acquired through a variety of channels, including banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and recognised stock exchanges such as the NSE and the BSE. Eligible buyers encompass a wide spectrum, from resident individuals and Hindu Undivided Families (HUF) to trusts, universities, and charitable institutions.

Investing in SGB is a straightforward process, particularly when done online. Here are the steps to follow:

Step 1: Log in to the net banking account.

Step 2: Select 'e-Service' from the main menu, then choose Sovereign Gold Bond.

Step 3: First-time investors must register, review the Reserve Bank of India's terms and conditions, and proceed. Enter the necessary details for the SGB scheme and the depository participant from NSDL or CDSL, which hosts the demat account.

Step 5: Submit the registration form.

Step 6: After registration, click on the 'Purchase' option in the header tab.

Step 7: Input the subscription quantity and nominee details.

Step 8: Enter the one-time password (OTP) sent to the mobile phone to complete the process.

Furthermore, SGBs can also be acquired from the secondary market, even after the last subscription date, through primary issuance by stock exchanges or the Reserve Bank of India (RBI).

Industry experts are optimistic about the prospects of the Sovereign Gold Bond Tranche 2 in the 2023-24 Series. Colin Shah, MD of Kama Jewelry, emphasised the security and potential returns that gold investments offer in the current economic climate.

With gold expected to outperform many other asset classes, Shah anticipates substantial long-term returns of more than 20 percent. Analyst estimates also suggest that gold is poised to rise by more than 10 percent CAGR up to 2026, making it an enticing proposition for investors seeking alternatives in these uncertain times.