commodity-backed bond

(redirected from Gold Bonds)

Commodity-backed bond

A bond with interest payments tied to the price of an underlying commodity.

Commodity-Backed Bond

A bond with a coupon or principal tied to the price of some, stated commodity such as gold. A commodity backed bond may carry a low coupon rate but it allows the bondholder to hedge against inflation because the price of commodities usually rises over time. That said, some commodities are highly volatile, and the bondholder assumes the risk of a loss due to a fall in the commodity's price. Commodity backed bonds are relatively rare and are usually issued by companies that have some stake in the underlying commodities. It is also called a gold bond.

commodity-backed bond

A rare bond that has its interest payments and/or principal repayment tied to the price of a commodity such as silver or oil. Although such a bond carries a relatively low interest rate at the time of issue, it gives the investor a hedge against inflation since the price of the commodity is likely to rise. These bonds are usually issued by firms having a stake in the commodity used to back the security. Also called gold bond.
Mentioned in ?
References in periodicals archive ?
The Reserve Bank of India, in consultation with the Government of India, has issued twenty one tranches of Sovereign Gold Bonds for a total value of approximately ?
Summary: New Delhi [India], Dec 8 (ANI): The issue price for the next subscription period of the Series III of Sovereign Gold Bonds 2017-18 has been fixed at Rs.
In a statement the Turkish Undersecretariat of Treasury announced plans to issue gold bonds and gold-based 'rental certificates' (Sukuk) through designated branches of state-owned Ziraat Bank from 2 October 2017.
The government has mobilised Rs 1,085 crore in the sixth tranche of the Sovereign Gold Bonds (SGB) scheme.
Gold ETFs track the metal's prices and each unit of these securities is generally equivalent to one gram of gold, while Sovereign Gold Bonds are government securities denominated in grams of gold offer an alternative to holding gold in physical form.
Maharashtra, July 20 -- Large number of investors and mutual fund players are set to benefit from National Stock Exchange of India Limited's (NSE) electronic mutual fund platform which has started offering subscription to Sovereign Gold Bonds.
The bank said, 'The Gold Monetization Scheme aims to tap household gold stocks of around 22,000 tonnes, while the Sovereign Bond Scheme will help shift part of the estimated 300 tonnes of physical gold bars and coins purchased every year in the country for investment into Demat Gold Bonds.
Vikaas Sachdeva, chief executive officer, Edelweiss Asset Management, explains the difference between sovereign gold bonds and gold exchange-traded funds or ETFs.
Government of India, in consultation with the Reserve Bank of India, had floated Series III of Sovereign Gold Bonds 2017-18, for a period from October 09, 2017 to December 27, 2017 (with subscription period Monday to Wednesday every week).
50 per gram from the issue price of gold bonds to those investors, who apply online and pertain to digital mode of payment.
The funds raised through the gold bonds will form part of the government's market borrowing programme.