Sovereign gold bond 2019-20 Series-X offers 156% return on redemption price

Central fixes premature redemption price at Rs 10,905, giving investors almost absolute gains

The Reserve Bank of India has announced the premature redemption price and date for the Sovereign Gold Bond (SGB) 2019-20 Series-X scheme, offering investors a chance to book gains of nearly 156 per cent.

Redemption date and price

 

The early exit window for the tranche opened on September 11. The redemption price has been fixed at Rs 10,905 per gram, based on the simple average closing price of 999-purity gold for 8-10 September 2025, as published by the India Bullion and Jewellers Association (IBJA).

 

This series was originally issued on March 11, 2020 at Rs 4,260 per gram. The new redemption price implies an absolute return of Rs 6,645 per gram, nearly 156 per cent, excluding the 2.5 per cent annual interest that SGB investors earn during the holding period.

 

Early redemption rules for SGBs(Sovereign gold bond)

 

SGBs have an eight-year tenure but investors can redeem after the fifth year on interest payout dates. Key points:

 

Eligible date: Redemptions are made after five years.

 

Price calculation: Based on the simple average of closing gold prices for the previous three business days.

 

Mode: Investors must approach their banks, brokers, or depositories to submit redemption requests.

 

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Why this matters

The new redemption price highlights how SGBs have rewarded long-term investors with both capital appreciation and interest income. For many, this is a way to monetise gains while avoiding issues like making charges or purity concerns linked to physical gold.

 

A quick recap of SGB benefits

 

Secure investment: No risk of theft or purity issues.

 

Annual interest: 2.5 per cent interest paid semi-annually.

 

Tax efficiency: Capital gains on redemption after maturity are tax-free.

 

Loan collateral: Can be pledged for secured loans.

 

Market risk

 

While SGBs track gold prices, investors should remember that returns are tied to market rates. If gold prices fall, redemption value may be lower.

 

For those holding the 2019-20 Series-X bonds, the upcoming redemption offers an attractive opportunity to realise significant gains.