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The investors of Sovereign Gold Bond (SGB) are rejoicing due to enormous returns because the Reserve Bank of India (RBI) had fixed the premature redemption price of SGB 2019-20aw Series IV at 15,814 per unit, which will come into effect on March 17, 2026. This price, at the simple average of the 999-purity gold close of prices on March 12, 13, and 16, 2026, provides an absolute value of returns of approximately 312 percent to online applicants at the issue price of 3840 per gram.

Computation: 15814-3840=11974 gain =312%. An investment of 1 lakh in 2019 is currently able to redeem at an approximate amount of 4.12 lakh (with no inclusion of the 2.5 percent annual interest on the principal investment). Offline purchasers at 3,890 have reduced yet still good returns of about 306 percent.

That this tranche, which can be left prematurely after a 5-year lock-in, is interesting, showing the attractiveness of the scheme in the context of the skyrocketing gold prices. Bondholders obtain money that is similar to the value of current gold plus interest, and this makes SGBs a tax-efficient and safe gold investment project. Other windfalls might occur in subsequent months in the form of more tranches.