Hi, I recently bought a SGB SGBDE31lll in zerodha and the price of the same listed today is 6178. But if I see other SGBs price there is a huge difference. For instance the price of SGBDE30lll today is 6313.
Why is the variation? The price is the rate of 1gm of 24karot gold and it should be the same in all the SGBs right? Can someone pls clarify?
It is not the price of gold. What you are seeing is the last traded price of that SGB in the secondary market. This depends on the supply demand of (different) SGBs on secondary market - irrespective of the underlying price - you can actually take advantage of this.
Price of SGB is equal to price of Gold only at the time of issue and at the time of redemption. Redemption is different from selling it in secondary market. Redemption of SGB can happen only after 5 years of issue, the process of which I’m not actually aware
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As mentioned in the SGB FAQ on the RBI website - The nominal value of Gold Bonds shall be in Indian Rupees fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period hence the allotment price for the issues is accordingly derived, due to which the allotment price differs for every SGB issued. Further, the current market price and LTP in the secondary market depend entirely on the demand and supply factors for the SGB issue.
Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after the fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges if held in demat form. It can also be transferred to any other eligible investor. In case of premature redemption, investors can approach the concerned provider thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.
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