Superannuation: Why Investing In Gold Makes Sense
Precious metals, especially gold, have historically proved to be effective assets that can help diversify your portfolio.
This helps investors build wealth over the years, whilst minimising risk along the way.
These diversification qualities can be particularly useful for Australian’s building wealth through their superannuation, including SMSF trustees.
Alongside their diversification qualities, precious metals are highly valued inside superannuation portfolios given they:
Have a track record of delivering strong long-term returns, with gold rising by more than 8% per annum over the past twenty plus years.
Typically outperform during periods of low real interest rates and/or high inflation, with the gold price in Australian dollars historically rising by more than 20% per annum in years inflation is high.
Highly liquid, with both the global gold and silver market seeing tens of billions of dollars in daily turnover, which makes them easy for investors to buy and sell.
The above attributes have driven a surge in investment into precious metals in Australia since the turn of the century, with many investors concerned that without gold and silver in their portfolio, they are too exposed to share and fixed-income markets.
This is especially the case in the aftermath of the global financial crisis and the COVID pandemic, with debt levels continuing to rise, central banks printing money, interest rates still near record lows in real terms, and a resurgence in inflationary pressure.
Physical Gold vs Superannuation Funds
Gold has been one of the best performing assets of the new millennium, outperforming almost all other asset classes since the turn of the century. Gold has also outperformed most traditional superannuation funds, as you can see in the table below, which highlights both the performance of gold priced in Australian dollars, and the performance of superannuation strategies across the risk spectrum from conservative to all-growth funds.
Table: Gold vs Superannuation funds – multiple time periods to the end of 2022
Source: ABC Bullion, LBMA, RBA, Chant West
How to Invest in Gold using Superannuation
To use your superannuation to invest in gold or silver through ABC Bullion, you must have a self-managed superannuation fund (SMSF). To open an account with ABC Bullion in the name of your SMSF, simply click on create account, and select SMSF.
Note that ABC Bullion allows you to open an account with either a corporate trustee, or individual trustees.
As part of your account application process you may be asked to provide supporting documentation, including:
Drivers licences and/or other photo ID
Trust deeds
ACNs if relevant
Once your account is open, you will be free to trade, with all documentation (invoices, storage statements etc) issued in the name of your SMSF, making it easier to complete the paperwork required as part of the annual reporting and audit of a SMSF.
ABC Bullion also offers a range of storage options for SMSF trustees.
For more on opening accounts and trading, please visit our new to bullion page.