SGBs on NSE, BSE trading at par with RBI’s December tranche issue price!

Sovereign Gold Bonds (SGBs) on stock exchanges are currently being traded at more or less same price as that of the price of those bonds that were issued in the latest tranche of the Reserve Bank of India (RBI) which was launched on Monday, December 18, 2023 . The apex bank had fixed issue price of SGB scheme 2023-24 Series III (latest tranche) at Rs 6,199 per gram of gold. Most of such SGBs as issued by the RBI in previous years are being traded in the secondary market at more or less same price as compared to the issue price of RBI’s latest tranche . In fact, such SGBs with three or more years of expiry left are being traded at higher than the issue price that the RBI has fixed for its latest tranche.

SGBs representing one gram of gold that were issued in fifth tranche in 2020 are currently being traded on the NSE at Rs 41 premium to issue price of RBI’s SGB’s latest tranche. The 2020-21 Series V SGBs are currently being traded at Rs 6,240.

Similarly, one unit of those bonds that were issued in 2019 and would expire in 2027, such bonds are currently priced at Rs 6,230 on the NSE, which is at Rs 31 premium.

So, if you have thought that you would buy the bonds on stock exchanges and not subscribe to the latest tranche because you would get the bonds there at a lower price as compared to issue price of the RBI’s latest tranche, then, you need to give it a second thought! Forget about getting a discount there. Rather, you would have to pay a higher amount if you purchase those bonds on the exchange.

In last few years, the yellow metal has given handsome returns to investors. In the last one year, price of gold has increased by 13 per cent. Currently, price of one unit of the physical gold (bullion) is Rs 6,255. Because, the gold price has surged so much, some investors had considered investing in SGBs that are currently being traded in secondary market because these were issued at comparatively lower price. But, their prices have also flared up since these were listed on the exchanges. So, it won’t be a profitable deal.

Some commodity market experts have also advised investors that they could divide their capital between two tranches that RBI had recently announced. One is already open for subscription. While, the apex bank will launch another tranche on February 12, 2024. Since, gold price is on upward trajectory, so if investors divide the capital and invest in both these tranches then they could benefit from rupee cost averaging.

The RBI opens subscription windows of sovereign gold bond schemes every year in different tranches. The latest tranche is open for subscriptions till Friday, December 22, 2023.