Is Sovereign Gold Bond Tradable?

Sovereign Gold Bonds (SGBs) were introduced by the Government in 2015 as an alternative mode of investment in gold. One question that may arise in our mind is whether these bonds are tradeable or not. In this article, we will explore the answer to this question in detail.

  1. What are Sovereign Gold Bonds?
    They are issued by the Reserve Bank of India on behalf of the Government of India.
    They are denominated in grams of gold and are issued in tranches at periodic intervals.
    They carry an interest rate of 2.50% per annum, payable semi-annually.
    The bonds have a fixed tenure of 8 years
  2. Can Sovereign Gold Bonds be traded?
    Yes, they can be traded on the secondary market just like any other financial security such as stocks or bonds.
    Investors can buy or sell them through registered stockbrokers.
    The bonds are listed on the stock exchanges.
  3. Factors that affect the price of Sovereign Gold Bonds:
    Prevailing market price of gold.
    Prevailing interest rates.
    Demand and supply conditions in the market.
  4. Tax implications of selling Sovereign Gold Bonds:
    If sold before three years from the date of purchase, gains will be treated as short-term capital gains and will be taxed at the investor’s applicable income tax slab rate.
    If held for more than three years, gains will be treated as long-term capital gains and will be taxed at a lower rate of 20% with indexation benefits.
  5. In conclusion, Sovereign Gold Bonds are a tradable instrument that offers investors an attractive investment option in gold. Investors can buy or sell them on the stock exchanges through registered stockbrokers. The price of the bond is influenced by various market factors, and investors should be aware of the tax implications before selling them. Sovereign Gold Bonds offer the benefits of safety, liquidity, and returns linked to the market price of gold, without the hassle of physical storage or security concerns.

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