Key idea
A government way to own gold that also paid interest. Note one important update: fresh issues have stopped, so new buyers use the secondary market.
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They track the price of gold and pay a fixed 2.5% annual interest, which physical gold never does. They run for 8 years, with an exit option after 5, and are held in your demat or records rather than as metal.
Why they were attractive
Gold-linked
value moves with gold price
2.5%
annual interest on top
No storage
held electronically
The important current update
Fresh SGB issuance has been paused. The last new tranche was in February 2024, and no new issues have been offered since. New investors cannot buy a fresh tranche today; they can only buy existing SGBs on the stock exchange (secondary market) through a demat account. Existing bonds remain valid and keep paying interest to maturity.
Tax treatment has also shifted, with the maturity capital-gains exemption now tied to being an original subscriber holding to maturity. Tax figures for FY 2026-27. The Budget can change them, so confirm the current year.
SGBs remain a notable idea, gold that pays interest, but with no new issues, gold ETFs and existing secondary-market SGBs are the current routes. What suits you is your decision.
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