In SGB context, "discount" refers to the percentage difference when a Sovereign Gold Bond's market price is below its fair value.

Discount = (Fair Value - Market Price) / Fair Value × 100

A discount means you're getting gold exposure at less than its theoretical worth - essentially buying gold at a lower price than current market rates.

Why SGBs trade at discount: - Lower liquidity in secondary market - Investor preference for other investments - Market sentiment - Time to maturity (longer tenure = potentially higher discount)

Buying at discount is advantageous because at maturity, you receive full gold value regardless of purchase price.