Investors in sovereign gold bonds can get a shock! The government may stop the scheme, this is the reason

If you also invest in the government's sovereign gold bond scheme, you may also get a shock. The government can now stop the scheme or reduce its installments. If this happens, the investors who have invested in it with the hope of good returns may suffer a huge loss. Let us know why the government can stop this scheme?

4 Month ago

If you also invest in gold then this news may prove useful for you and this news may surprise you too. Investing in gold is always considered beneficial and safe. People who invest in gold always get profit in long term. Hence the government also runs many types of schemes. Sovereign Gold Bond Scheme is one of them. According to media reports, the government may now discontinue the scheme or reduce its range. If this happens, the investors who have invested in the sovereign gold bond scheme with the hope of good returns may suffer a huge loss.

In the Union Budget presented in Parliament on July 23, the government has announced a reduction in customs duty on gold. After the reduction in customs duty, sovereign gold bond prices on the NSE fell by 2 to 5 percent.

What is a Sovereign Gold Bond?

The Sovereign Gold Bond Scheme was launched in 2015. Sovereign Gold Bonds are issued by the RBI on behalf of the government, so they are a government guarantee. In this, you get a guaranteed return on investment. This earns 2.5 percent interest per annum on the investment. This money is deposited in the investor's bank account every 6 months.

The first scheme or series of Sovereign Gold Bond Scheme came on November 30, 2015. which matured in November 2023. The second series of Sovereign Gold Bond Scheme 2016-17 was launched in August 2016. The series is going to mature next August 2024.

Why should sovereign gold bonds close?

According to media reports, the demand for sovereign gold bonds may decrease due to reduction in customs duty. Also, the government believes that this scheme is becoming expensive for them. This is the reason why the government is planning to discontinue the scheme or reduce the range of the scheme.

On the other hand, according to a media report quoting a senior government official, the government has reduced its sovereign gold bond issuance target by 38% for this financial year. According to the official, the government is now planning to release Rs 18,500 crore worth of 'paper gold' in 2024-25. In the interim budget Rs. 29,638 crore was estimated.

Limits for buying sovereign gold bonds

In the Sovereign Gold Bond Scheme, an individual can purchase a maximum of 4 kg gold bonds in a financial year. While the minimum investment required for the bond is 1 gram. Whereas, trusts or other similar bodies can purchase bonds up to 20 kg. Let us tell you that in the applications for this scheme minimum 1 gram and its multiples are declared.

How will investors be harmed?

Investors who invested in the sovereign gold bond scheme under series one 8 years ago may now suffer losses. Actually, the series of the year 2016-17 came on 1 August 2016. At that time its issue price was Rs 3119 per gram. At that time 2.75 percent interest was paid on it per annum. The maturity of this series is going to happen next month i.e. in August.

Before the budget, the price of gold was around 74 thousand rupees per 10 grams. If the government had not reduced the custom duty on gold, the price of gold could have increased further. But due to this the price of gold has decreased. Due to non-reduction in customs duty, suppose the price of gold was 75 thousand rupees per 10 grams in August and now it is around 70 thousand rupees, in such a situation the investor has lost 5 thousand rupees per 10 grams.