SGB 2018-19 Series VI: 361% Return on Premature Redemption
By Market Desk
Sovereign Gold Bond 2018-19 Series VI offers a remarkable 361.1% return via premature redemption. RBI sets price at ₹15,102 per unit.
The Sovereign Gold Bond (SGB) 2018-19 Series VI is open for premature redemption starting today, with the Reserve Bank of India (RBI) setting the redemption price at ₹15,102 per unit. This offers investors who purchased the bonds at the issue price of ₹3,276 per gram a substantial return.
These investors are looking at an approximate 361.1% return from gold price appreciation alone. An initial investment of ₹1 lakh made on February 12, 2019, would now be valued at about ₹4.61 lakh, excluding additional interest.
Understanding SGB Redemption Pricing
The premature redemption price is determined through a specific calculation methodology. It is based on the simple average of the closing prices of 999-purity gold.
This average is derived from the three business days preceding the redemption date, specifically August 7, 10, and 11. The India Bullion and Jewellers Association (IBJA) publishes these benchmark gold prices.
Benefits Beyond Price Appreciation
Sovereign Gold Bonds offer distinct advantages over physical gold holdings. These benefits include the elimination of storage costs and making charges typically associated with gold jewellery.
Furthermore, SGBs provide a consistent annual interest payment of 2.5%, disbursed to investors semi-annually. This interest is separate from any capital gains from gold price movements.
Investor Considerations for Early Exit
Despite the attractive 361% return, investors should carefully assess their options before opting for premature redemption. Key factors to consider include their existing gold allocation and expectations for future gold price trends.
Immediate investment needs also play a role in the decision-making process. Choosing to redeem in August 2026 means exiting the investment approximately six months prior to its full scheduled maturity in February 2027.
Investors who decide to hold onto their bonds will continue to be exposed to gold price fluctuations. They will also keep receiving the 2.5% annual interest until the bond reaches its full maturity.