Investing Gold In Your SMSF

Investing Gold In Your SMSF

Can you invest gold or buy gold with your SMS? The short answer to that question is – yes. However, there are a few rules you need to be aware of before you do, especially when you are dealing with gold bullion. Gold bullion is not a collectable, therefore there are strict rules that apply. 

Gold collectible coins vs.  Physical gold bullion coins

The value of gold collectible coins is influenced by a range of things like the weight of the coin, the purity, and the decorative art, the collectability of the coins themselves and the rarity of the coins. Gold bullion coins are different from gold collectible coins. When you have collectible coins in your SMSF you have to comply with a number of strict regulations. For instance, you cannot store or show off your gold in your home. You also cannot lease them and any decisions around storage has to put down in writing and the gold has to be insured. 

Auditing and record keeping for SMSF 

The trustee of your SMSF has to keep record to prove that you have gold that exists in your SMSF. This should be verifiable to an independent auditor. You should also have proof of where and how your gold is stored. If it’s with a mint like the Perth mint, you will need to obtain a holding statement proving its existence. Where you hold your gold investment for your SMSF can be a problem if it’s in a private bank’s vault or a safety deposit. This could make proving its existence problematic. Institutions like the Perth Mint or one of its accredited distributors is ideal. They can do more like take care of buying the actual gold, store, insure, evaluate and provide you with all the relevant documentation that will be required by an independent auditor. 

Gold and other precious metals are attractive for investors who want a protective asset when times are uncertain. The only barrier for SMSF trustees is that gold in SMSF does not generate an income. You won’t get dividends from your investment or any distributions towards your pension, however, you will have to rely on the appreciation of gold bullion to get a good return when you want to sell. 

Why buy gold for your SMSF?

Gold is a great investment portfolio diversify. 

If the economy is bad or there are things happening in the global market that leave you to believing that the global financial markets are tanking, the best way to protect you SMSF is to invest your fund into physical gold bullion. 

The other reasons for buying gold for your SMSF is that gold is considered to be a great insurance or hedge in times of economic turmoil. 

The third reason is that gold is a safe haven investment. When other asset classes are failing gold can act as a safe haven investment. 

The bottom line is that it is always a good idea to gold in SMSF. It protects your fund, increases your returns in the long run but you have to educate yourself about the regulations that apply.