The first SGB issued in Nov 2015 has given 128% return in 8 years. Tax-Free

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SGB is not backed by actual gold.
It is backed by a sovereign guarantee (simialr to GSECs) to pay back upon redemption, the value of gold in INR.

However, unlike GSECs,
the value of SGBs (in the secondary market, and upon redemption)
depends on the value of the gold in the market.

This old topic-thread has few more details and discussion around SGBs

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