Gold bond investors hit the jackpot! Returns of up to 366% earned over 8 years..
Investors in the Government of India’s Sovereign Gold Bonds (SGBs) have hit the jackpot, with those who invested eight years ago now seeing returns of up to 366%. For these investors, October 23, 2026, is a significant date. The Reserve Bank of India (RBI) has set the price of gold at ₹14,425 per gram for the final redemption of the SGB 2018-19 Series II. At this price, investors who applied online could realize a profit of approximately 366% on their initial investment, while offline investors would see a return of about 359%. This figure does not include the interest earned over the eight years.
What are Sovereign Gold Bonds?
Sovereign Gold Bonds are investment instruments issued by the government. They are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. Investing in these bonds allows you to benefit from fluctuations in gold prices without the need to purchase and store physical gold. Applications for the SGB 2018-19 Series II were accepted from October 15 to October 19, 2018, and the bonds were issued on October 23, 2018. They had a tenure of eight years, which is now coming to an end.
How did the RBI determine the price of ₹14,425 per gram?
According to the RBI, the final redemption price for the gold bonds is calculated by taking the simple average of the closing prices of 999-purity gold over the three business days preceding the redemption date. For this purpose, the prices published by the India Bullion and Jewellers Association (IBJA) are used. Under this rule, the final redemption price has been set at ₹14,425 per gram, based on the average of the closing prices of gold on October 19, 21, and 22, 2026.
What is the profit on an investment of ₹3,096?
According to an announcement by the Ministry of Finance on October 12, 2018, the initial issue price for this series was ₹3,146 per gram for those applying offline. Investors who applied online and made digital payments received a discount of ₹50 per gram, bringing their initial cost down to ₹3,096 per gram.
With the redemption price at ₹14,425 per gram, the returns for investors would be as follows:
Offline Investment Online Investment
Purchase Price per gram ₹3,146 ₹3,096
Final Redemption Price per gram ₹14,425 ₹14,425
Profit per gram ₹11,279 ₹11,329
Return on Initial Investment 358.52% 365.92%
Accordingly, offline investors will realize a capital gain of ₹11,279 per gram, while online investors will realize a gain of ₹11,329 per gram. This calculation is based solely on the difference between the purchase price and the final redemption price; it does not account for interest earned or applicable taxes.
Earnings from interest over 8 years
Investors in Sovereign Gold Bonds (SGBs) receive an annual interest of 2.50%, calculated on the initial issue price of the bond. Interest is paid semi-annually, with the final interest payment made alongside the principal amount upon maturity. Thus, those who invested in the SGB 2018-19 Series II benefited not only from capital gains due to the rise in gold prices but also from interest earned over the 8 years. However, when calculating the actual total earnings, factors such as interest, applicable taxes, and other conditions related to the investment are also taken into account.
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