Yes – your SMSF can invest in gold and silver bullion and other precious metals as part of your investment strategy however there are a number of rules that you must comply with. Importantly, an SMSF investment in gold or silver bullion valued entirely on the spot price of the precious metal. Gold bullion is not a collectable therefore the strict rules around SMSF collectibles do not apply.
Gold and silver collectible coin investments versus physical gold
The value of gold and silver collectible coins is influenced not only by the weight of precious metals they contain but also the decorative art and the number of coins minted. You also need to be careful as gold coins described as “gold bullion coins” can also be considered collectibles. When your hold collectable gold coins inside your SMSF, you face strict regulation. You can’t, for instance, be stored to be shown off in your home or a private residence of a related party. Nor can you lease them to a related party.
Also read: SMSF Collectibles – Time to Act
Audit evidence and record keeping for SMSF gold and silver bullion investments
With both bullion and collectables, there are still considerations for you as trustee of an SMSF. You need to keep appropriate records to prove the existence of the SMSF gold and silver investments to the independent auditor of your fund. Where you store the bullion with a reputable mint – such as The Perth Mint – you can get a June 30 holding statement to prove its existence.
Where you hold your SMSF investment in gold and silver bullion in a private vault, safe or a safety deposit box with a bank, it can be problematic for the auditor. This is because it is more difficult for you to prove the existence of your gold or silver bullion investment at 30 June. For this reason Superfund Partners recommends utilising a reputable gold and silver bullion investment provider like The Perth Mint or one of it’s approved distributors who are located across Australia. These distributors can take care of purchasing, sale, storage, insurance and valution of your SMSFs gold and silver bullion and provide all relevant documentation that will assist with the preparation of your SMSF accounts and independent audit.
The Perth Mint has also launched a mobile phone app called “GoldPass”
All decisions around storage must be recorded in writing by fund trustees and the asset must also be insured.
SMSF investments into gold and silver bullion are attractive for investors as a protective asset during uncertain times, the barrier for SMSF trustees is that it does not provide you with any income while you own it. You don’t get dividends or distributions to help cover pension payments, for instance, but you will need to rely on appreciation in bullion prices at the time you want to sell to provide a return.
Traditionally the alternative to physical gold is to buy gold mining companies on the ASX, but this means you are also taking on the risks of how well managed they are.
SMSF investments in gold and silver via ETFs
With the expansion of exchange traded funds (ETFs) on the ASX, SMSF trustees can also obtain exposure to bullion using an ETF without the complexity of storing and managing the physical asset.
ETF Securities Physical Gold fund is one such ASX fund under the code ASX: GOLD. It gained 30-per cent plus in the past 12 months. This ETF is also used by robo-adviser Stockspot as part of it’s portfolios.
Another is BetaShares Gold Bullion ETF listed under ASX: QAU, which gained about 25 per cent over the past year.
How Superfund Partners can help
Superfund Partners assists a sizable number of SMSF trustees with their investments into gold and silver bullion as well as other precious metals. We have significant expertise when it comes to the applicable superannuation rules and regulations, and our independent SMSF auditors have a regular dialogue with the ATO which helps ensure we know what the regulator is looking at when it comes to SMSFs investing in gold and silver bullion.
Depending on HOW you invest your SMSF into gold, silver or other precious metals can have a significant impact on your SMSF administration and audit fees.
If you believe global financial markets are about to implode and the only means to protect your SMSF portfolio from this doomsday scenario is to invest 99% of your fund into physical gold and silver bullion, Superfund Partners is probably not the best specialist SMSF business for you.
If however you have (or are looking to) incorporate physical gold and silver bullion investments of physical precious metal backed ETFs as part of your SMSF portfolio for one of the following three reasons:
- As a diversifier
- As an insurance policy / hedge
- As a safe haven
…then Superfund Partners may be able to assist you.
To learn more about Superfund Partners’ SMSF administration and advice services, please contact us to find out more or to obtain a fee quote.