Fair Value of a Sovereign Gold Bond is the calculated theoretical price based on the current gold price and time remaining until maturity.

The fair value helps investors determine whether an SGB is trading at a discount or premium in the secondary market.

Formula (simplified): Fair Value = (Gold Price per gram × Number of grams per unit) × Present Value Factor

Where Present Value Factor accounts for: - Time to maturity - Discount rate (opportunity cost) - Expected interest payments

When market price < fair value, the SGB is trading at a "discount" (good buying opportunity) When market price > fair value, the SGB is trading at a "premium"