Investors in Sovereign Gold Bonds (SGBs) are celebrating substantial returns as the Reserve Bank of India (RBI) has announced the final redemption price for the SGB 2017-18 Series-IV. These bonds, maturing on October 23, 2025, have yielded an impressive 325% return for investors.

The RBI has set the redemption price at ₹12,704 per gram of gold. This figure is based on the simple average of the closing price of gold of 999 purity for the three business days leading up to the redemption date: October 17, 2025, October 20, 2025, and October 22, 2025.

Originally issued on October 23, 2017, at ₹2,987 per gram, the SGB 2017-18 Series-IV has proven to be a lucrative investment. Investors will receive ₹12,704 per unit upon maturity. The absolute return calculates to ₹9,717 per unit (₹12,704 - ₹2,987), which translates to a 325% return, excluding the additional annual interest of 2.5% that SGB holders have been receiving throughout the tenure.

Sovereign Gold Bonds are government securities denominated in grams of gold. They provide a safe and convenient alternative to holding physical gold. The scheme was introduced in 2015 with the aim of reducing the demand for physical gold and shifting a portion of domestic savings into financial assets.

SGBs offer a dual advantage: capital appreciation linked to gold prices and a fixed interest rate. The interest of 2.50% per annum is paid semi-annually directly to the investor's bank account, with the final interest payment made along with the principal upon maturity. Furthermore, any capital gains earned by individuals through redemption are exempt from tax. The bonds are automatically credited to the investor's account on the date of maturity.

The RBI has clarified that the redemption price is calculated based on the average closing price of gold of 999 purity over the previous three business days, as published by the India Bullion and Jewellers Association Ltd (IBJA).

In related news, the RBI reported that its gold reserves surpassed 880 metric tonnes in the first half of fiscal year 2025-26, valued at USD 95 billion as of September 26, 2025. This highlights the increasing importance of gold as a safe-haven asset, particularly during times of global economic uncertainty.

While SGBs have a total tenure of eight years, the RBI allows premature redemption after five years from the date of issue. For instance, the RBI has also announced the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series-VII, allowing investors to redeem on October 20, 2025, after 5 years, at a price of Rs 12,792 per gram, yielding a 153% return. Investors in SGB 2017-18 Series-III, which was issued at Rs 2,866 per gram, will receive Rs 12,567 per unit on October 16, 2025. This translates to an absolute simple return of nearly 338%.

SGBs are considered a safer alternative to physical gold due to the elimination of storage concerns, assurance of purity, and absence of making charges. The bonds are held either in RBI books or in Demat accounts, reducing the risk of loss.