The Reserve Bank of India on behalf of the Government of India has come out with the second tranche of Sovereign Gold Bonds. The issue will remain open till January 22, 2016 and bonds will be issued on February 8,
2016. The issue price set for this tranche is | 2600/gram. The issue price of these bonds is calculated by averaging the previous week’s closing price of gold of 999 purity. The first issue was priced at | 2,684 per unit.
Investors will get additional interest at the rate of 2.75% per annum on the initial deposited amount. Investors will continue to have full exposure to gold prices to the extent of amount deposited.
Sovereign gold bonds offer the best alternative to take exposure to gold as it offers additional interest. There are no annual recurring expenses as compared to gold ETFs (expense ratio in ETF is ~1%) and no storage hassle like those involved in physical gold holding.
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