The inaugural Sovereign Gold Bond (SGB) issued on November 30, 2015, is approaching its maturity date on November 30, 2023. Investors in this historic first tranche are set to reap substantial returns as the eight-year term concludes.

 

The Reserve Bank of India (RBI) has disclosed the final redemption price for the SGB 2015-I tranche, set to mature at the end of this month. Each SGB unit will be redeemed at Rs6132, determined by the simple average of the closing gold prices during the week of November 20–24, 2023.

 

Investors who ventured into the first SGB tranche stand to gain significantly, given the remarkable surge in gold prices over the past eight years. The initial purchase price was Rs2,684 per gram of gold, less than half of the prevailing price. The fixed interest rate offered was 2.75% per annum on the initial investment amount.

 

For a clearer understanding of potential returns, consider an investor who acquired 35 grams of gold during the initial SGB offering at an investment of Rs 93,940. With the redemption price at Rs 6,132 per gram, the investor is poised to receive Rs 2,14,620. In absolute terms, this represents a return of 128.5%, and in Compounded Annual Growth Rate (CAGR) terms, the returns stand at 10.88%.

 

The RBI announces SGB tranches every financial year, allowing investors to subscribe to a maximum of 4kg per individual annually, with a minimum investment of 1 gram. Investors specify their desired investment amount in the application, and the quantity of gold is determined by the RBI's indicated issuance price, with any balance refunded to the investor's bank account.

 

As the first SGB tranche reaches maturity, it serves as a testament to the potential gains of investing in gold through government-backed instruments. The forthcoming redemption underscores the enduring allure of gold as a sound investment choice.