commodity-backed bond

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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.
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It may be recalled that Reserve Bank of India in consultation with Government of India (GoI) had launched Sovereign Gold Bonds (SGB) in an effort to reduce demand for physical gold by providing an alternative investment instrument linked to gold.
Moreover, the interest on gold bonds is taxable and the capital gains tax shall also remain same as in the case of physical gold and ETFs.
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.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the gold bonds, and shall not constitute an offer, solicitation or sale of any gold bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful.
National Bonds' rewards programme offers over AED 46 million worth of prizes annually, including the AED 1 million cash prize in the first week of every month, as well as the weekly rewards of two BMW luxury cars, two gold bonds dedicated for female bondholders and school tuition fees tailored for two lucky minors.
Because Nantucket Gold bonds with the skin, there is no layering or wax carrier to seal pores.
The first tranche of Sovereign Gold Bonds was open for subscription from November 5 to November 20, 2015.
The finance ministry said on Friday that Sovereign Gold Bonds would remain open for public subscription between November 5- 20.
Santa Fe has entered into a "best-efforts" Placement Agreement with an investment bank with which Canarc and Endeavour Silver have enjoyed a long standing relationship, pursuant to which will place an estimated $22 million of 8% Gold Bonds Due in 2018 that are redeemable in cash or gold ETF.
Sovereign gold bonds, on the other hand, are aimed at people buying the precious metal as an investment.
Govt proposes to issue sovereign gold bonds to curb imports of the precious yellow metal