gold bond

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Gold bond

Bonds issued by gold-mining companies and backed by gold. The bonds make interest payments based on the level of gold prices.

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.

gold bond

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