Introduction

For centuries, precious metals like gold have played a significant role in financial systems and individuals' economic lives. Gold, in particular, has been a favored asset for converting liquidity into movable resources. Understanding how the gold market functions in India, especially concerning stock options and trading opportunities, is crucial. India ranks among the highest globally in gold consumption, making trading in gold stocks potentially lucrative. However, it's essential to conduct thorough research into available options to avoid making hasty decisions and ensure the security of invested capital for future asset allocation and value addition opportunities.

A gold bond is a debt security wherein the issuer owes the holders a debt and is obligated to pay them interest (known as the coupon) or repay the principal at a future date, called the maturity date. Individuals, Hindu Undivided Families (HUFs), and trusts can subscribe to gold bonds, with limits set by the government. Interest is typically paid at fixed intervals, and the bonds are negotiable, allowing for easy transfer in the secondary market. Payment for the bonds is made through cash payment modes, and once all payments are made, the issuer has no further obligations to bondholders after the maturity date. Gold bonds generally have a tenure of 8 years, with an option for early redemption after 5 years. The minimum investment is set at 1 gram of gold.

Q1. Who issues these bonds ?

As per the existing guidelines, Gold bonds in India are issued by the Government of India as per the relevant act. Also,  as per the existing guidelines, these bonds can be deposited in demat forms as well.

Q2. When can you buy these bonds?

As per the RBI directions, sovereign gold bonds are available for buying at select times during a financial year. For instance, for the gold bonds issued on 28th of April, 2020, the date of subscription was kept at April 20th to April 24th and for gold bonds issued on June 16th 2020, the date of subscription was kept at June 8th to June 12th. Thus, there is a leeway of five consecutive days for buying these bonds.

Q3. Where can you buy the gold bonds?

The government has designated the Stock Holding Corporation of India Limited (SHCIL), along with designated post offices or stock exchanges such as the National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, to act as the selling points for these gold bonds.

Q4. Price, maturity tenure and other details

The interest rate has been kept at 2.5%. Likewise, the reclamation cost will be in Indian Rupees dependent on the basic norms of shutting the cost of gold. Besides, the tenor of the Bond will be for a time of 8 years with a leave alternative in the fifth year. The capital increase charge emerging on the reclamation of SGB to an individual has been excluded. The indexation advantages will be given to long-haul capital additions emerging to any individual on an exchange of bonds.

Q5. How can one buy the gold  bonds?

Both offline and online modes are available for purchasing gold bonds. The process is similar for both: you need to fill out a form and complete your KYC compliance. The main difference is that online purchasing is just a click away, and you also receive an RBI-mandated discount on your purchase value if you buy gold bonds online and make the payment electronically. If you prefer the offline mode, you'll need to visit the office of the designated sales channel in person and fill out the required forms.

Q6. How to buy gold bonds online?

For the online procedure, there are much less hassles involved. Instead of physically visiting the designated points for the sale of gold bonds, you just need to log on to the SHCIL or to the designated bank’s online portal and complete the following steps:

1. Log on to the online banking option of your designated bank 
2. Click on the option for the Sovereign Gold Bonds that will be visible on the tab that reads services.
3. Fill out the details that are required for KYC procedures. In certain cases, there may be no need to fill in these details and they will appear on the screen by themselves. 
4. Fill in the details about the quantity or the amount of gold units that you wish to purchase.
5. Complete these formalities and submit the purchase form.

Conclusion

It can be concluded here that gold bonds are a sure way of participating in government securities activities for fund growth. Moreover, with the credible guidance of a firm like Tradebulls, your analytical base regarding the viability of the gold bond investment channel is sure to expand. In case you wish to know more, kindly click on the mentioned link: https://www.tradebulls.in/.