The Central Bank of Iran has launched the initial public offer for Bahar Azadi Gold Coin Bonds at the Iran Mercantile Exchange (IME).
The sovereign gold bonds (SGBs) should help restore stability to the chaotic bullion market, the CBI Governor Ali Salehabadi said at the weekend, IBENA reported.
The bonds are not taxable. Each individual can buy up to 100 coins in bonds.
Maturity of the SGBs are six months. Bonds will be liquidated in cash at maturity date based on the average price of gold coin bonds and bank certificate of gold coin deposits on the last trading session. The CBI guarantees the bond repayment.
The IME launched trade in gold coin certificates of deposit in 2016. Certificates of deposit are securities that show ownership of underlying assets that are usually kept with a certified third party. The owner of the gold certificate saves money on gold trade, delivery, storage and insurance.
Gold coin certificates of deposits are offered on Emami gold coins that approximately have a third of an ounce of gold. The CBI has also allowed secondary trade of the bonds.
Salehabadi revealed that the CBI has plans to let private companies mint and sell gold coins – so far the exclusive premise of the state.
"Given the bubble in gold coin prices and calls by private enterprise, a special taskforce was set up at the central bank to look closely at the private sector's performance” in the domestic gold industry.
The benchmark Bahar Azadi gold coin jumped more than 8.2% in the past week, reaching an all-time high of 157.09 million rails on Monday.
The Emami gold coin was quoted at 164.73 million rials, up 0.86% on the day before. Half Bahar Azadi coin gained 1.67% to buy 89.5 million rials while the Quarter Bahar Azadi coin was up 2.52% at 59.5 million rials.
IME is a commodities exchange in Tehran founded in 2006 dealing in farm, industrial and petrochemical products in the spot and futures markets.
The exchange has been offering gold coin futures contracts for years. However, spot trading is still done traditionally in Iran in the black market through bureaux de change and independent traders.
Tehran's main bazaar in the south of the city and Ferdowsi Street in the center of the capital are the main hubs for currency and gold trade in Iran.
IME also offers gold coin futures and gold funds. Gold futures are standardized, exchange-traded contracts in which the buyer agrees to take delivery, from the seller, a specific quantity of gold at a predetermined price on a future delivery date.
Commodity funds is a financial instrument made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets.
