Last Updated on March 7, 2023 at 5:18 pm
The finance ministry has announced the release dates of Sovereign Gold Bonds for 2021-2022. Six issues (tranches) are to be released. Thrice in May(!), once in July and twice in Aug. A discussion on when one can buy these when one should not.
There are at least three distinct ways in which investors approach gold. The majority of them (at least in India) accumulate it in physical form, typical jewels. Although some see it as an investment, it is a recyclable consumable. This accumulation can also be done electronically via ETFs, Gold Funds or Sovereign Gold Bonds.
The second approach is to track the price of gold for “some returns merely”. The third approach is to exploit the volatility of gold, add it to a portfolio of stocks and bonds, meticulously rebalance and track the volatility at the portfolio level. That is as a means of diversification and possible risk reduction. Also see: Will including gold in my portfolio help?
Sovereign Gold Bond Scheme 2021-22 Schedule
The Bonds can be purchased via scheduled commercial banks, Stock Holding Corporation of India Limited, designated post offices, NSE, BSE. This is the issue schedule for 2021-2022.
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| S. No. | Tranche | Date of Subscription | Date of Issuance |
| 1. | 2021-22- Series I | May 17-21, 2021 | May 25, 2021 |
| 2. | 2021-22 Series II | May 24 – 28, 2021 | June 01, 2021 |
| 3. | 2021-22 Series III | May 31 – June 04, 2021 | June 08, 2021 |
| 4. | 2021-22 Series IV | July 12-16, 2021 | July 20, 2021 |
| 5. | 2021-22 Series V | Aug. 09-13, 2021 | Aug. 17, 2021 |
| 6. | 2021-22 Series VI | Aug. 30- Sept.03, 2021 | Sept. 07, 2021 |
When not to buy Sovereign Gold Bonds!
Those who want “some returns” from gold or for some gold exposure in their portfolio for “diversification” should not buy Sovereign Gold Bonds. They are not liquid enough, you cannot sell them mid-way (unless you are ready to sell lower than the market rate of gold) and if you wait for them to mature, the returns can just about be anything! Shown below is the 8-year rolling returns of gold USD and gold INR price per troy ounce from Jan 1979 to May 2021.
Since you cannot sell them freely, you cannot tactically book profits or rebalance systematically with these bonds. If you wish to do this, choose a liquid ETF with low price-NAV variations. A gold fund that invests in a gold ETF would be a better choice.
When to buy Sovereign Gold Bonds
Use these only if your ultimate aim is to accumulate gold for a future need, say for a marriage. Sovereign gold bonds offer a tax-free, risk-free way to accumulate gold as long as your future gold purchase is more than eight years away. You also get 2.5% interest (taxable as per slab) on the initial gold value as a “thank you for trying to reduce gold imports” gift from the govt.
You can buy these bonds in the secondary market via a demat account from desperate investors looking for cash and willing to take a loss. This approach is risk-free because the bond tracks the price of 24-carat gold and at any given time and after eight years one could buy 22-carat jewellery
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