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

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

A premium means you're paying more than the theoretical value of the gold - essentially overpaying.

Why SGBs might trade at premium: - High demand for specific series - Low supply in secondary market - Short maturity (closer to redemption) - Market expectations of gold price rise

Buying at premium is generally not advisable as you're paying more than gold's worth. However, some investors pay premium for: - Very short maturity SGBs - Specific strategic reasons