Sovereign Gold Bond: Bumper Return in SGB! Money more than tripled in 8 years, RBI announcement will surprise you
Sovereign Gold Bond: Investors in the Sovereign Gold Bond (SGB) 2017–18 Series-VIII are in for a massive windfall as the Reserve Bank of India (RBI) has announced the final redemption price. With the tranche maturing on November 20, 2025, investors are set to receive exceptional returns of over 300% on their initial investment.
Redemption Price and Key Figures
The RBI has fixed the payout at Rs 12,300 per unit. This price was calculated based on the simple average of closing prices for 999-purity gold, as published by the India Bullion and Jewellers Association over three days—November 17, 18, and 19.
When the Series-VIII bond was originally issued in November 2017, the price was set at Rs 2,951 per gram. Comparing this with the redemption price, investors will enjoy an absolute gain of Rs 9,349 per unit.
| Key Metrics | Amount / Value |
|---|---|
| Issue Price (2017) | Rs 2,951 |
| Redemption Price (2025) | Rs 12,300 |
| Absolute Gain | Rs 9,349 per unit |
| Total Return | ~317% over 8 years |
Understanding the Returns
In annualised terms, the growth translates to a massive 19.7% Compound Annual Growth Rate (CAGR). This figure excludes the additional 2.5% yearly interest that SGB holders received until 2023, which further sweetens the deal.
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Join on TelegramThe primary reason for such strong returns is that SGBs track the domestic market price of gold. Since 2017, gold prices have surged, allowing the bond to capture the entire upside. This makes the 2017–18 tranche one of the most rewarding government-backed retail investments in recent history.
What Happens at Redemption?
The process is seamless for investors:
- No Action Required: Investors do not need to file any claims. The RBI directly credits the maturity amount to the linked bank account.
- Tax Benefits: For individuals, the capital gains arising on redemption are fully tax-exempt.
- Early Exit Rules: If the bond was sold before maturity, indexation benefits would apply to long-term capital gains. SGBs generally have an eight-year tenure but offer early exit options after the fifth year.
Launched in 2015 to curb the demand for physical gold, the SGB scheme has not seen fresh issuances since last year due to elevated global prices.
Disclaimer: This article is for informational purposes only. Please consult with a certified financial advisor before making any investment decisions.
