Whether it is for diversification, investment preferences, or the fear of the next global stock market and housing meltdown, a common client question is “can my Self-Managed Superannuation Fund (SMSF) invest in gold? If so, what are the rules?”
Why would you want to invest in Gold?Your SMSF is usually your largest wealth creation vehicle for your retirement, therefore having defensive assets that act inversely (oppositely) to the stock and property market may be the key to a truly balance portfolio. Thereby when a crisis such as a stock market crash and the property bubble bursting together, money commonly flees to gold and silver driving the price up.
Can the SMSF Invest in Gold?Your SMSF can invest in the majority types of Gold however the rules in relation to holding the investment are significantly different and may lead to certain types of gold investment being cost prohibitive. Gold Coins Coins are defined as a collectables and therefore fall under an extensive and costly set of rules, such as compulsory insurance, independent storage requirements and regular audits. Gold Bullion Bullion is what we think of in our heads of gold bars. They are not defined as collectables and therefore have a simplified rule set. The SMSF Trustees have to decide:
- Where the Bullion will be stored?
- Should the Bullion be insured?
How is the Bullion audited?When auditing an investment that falls outside the usual list of financial products; shares, bank accounts etc., that can be easily checked with a bank or broker the auditor of the SMSF is primarily concerned with confirming that the gold exists/still exists (Existence) and that it is appropriately valued (Valuation). We satisfy the auditor through:
- A signed declaration from the SMSF Trustees confirming existence and quantity of the Bullion,
- Letters from Vault Provider or Photos with 30 June newspapers,
- Insurance Policies,
- Copies of all purchase and sale invoices, and
- Providing details of the size and quality of the bullion.