Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
1
The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption / premature redemption.
2
It offers a superior alternative to holding gold in physical form. the risks and costs of storage are eliminated.
3
SGB is free from issues like making charges and purity in the case of gold in jewellery form.
4
The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.