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SMSF - Physical Silver/Gold possible?

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Martyvee, 12th Jul, 2008.

  1. Martyvee

    Martyvee Member

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    2nd Jun, 2006
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    Location:
    Adelaide
    Hi guys,

    I don't know much about super having mine in an industry fund, but am interested in setting up a SMSF in the future.

    I'm particularly interested at this point in time in Silver and Gold, and was wondering if it was possible to invest in physical bullion, and hold it in say a safety deposit box, or some other way.

    I'm aware that places like the Perth Mint allow the holding of allocated or unallocated bullion as well which is another option, and was wondering if the former was also possible within a SMSF?

    Also, while I'm on a roll, does anyone know of any good resources either online or book about SMSF's?

    Many thanks in advance, and successful investing!

    Martin
     
  2. Young Gun

    Young Gun Guest

    check out asx code "GOL" one share represents a beneficial interest in approximately 1/10th of one fine troy ounce of physical gold.

    http://www.goldbullion.com.au
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Hi Marty,

    It is possible. You'd have to speak to a SMSF specialist to get it up and running. As YoungGun said, another alternative is to buy it on the ASX (well, get your super fund to, there are a few super funds who will let you buy any direct shares).

    Keep in mind that commodities only have capital appreciation or depreciation and no income component, a bit like a rental property which is empty (or speculative shares), your not receiving the weekly rent which you may receive elsewhere (like a rental property with a tenant or blue chip shares, etc).

    Cheers,

    Dan

    PS Before making a SMSF investment speak to an FPA registered financial planner who specialises in SMSFs.
     
  4. Martyvee

    Martyvee Member

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    Thanks for the replies guys.

    Is there anyone out there who actually has physical gold or silver in their SMSF?
     
  5. Billv

    Billv Getting there

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    Marty

    It's good to see that you are thinking outside the square.:)

    I am not holding any gold at the moment.
    If I was to invest in gold I think the easiest way would be to invest through the ASX because buying physical gold involves contracts, security arrangements, insurance in case of loss etc etc.

    The SMSF deeds won't stop you from buying physical gold, but does it meet the sole purpose test which states that all investment activity has the sole purpose of providing retirement funds to the members of the fund?

    Cheers
     
  6. AsxBroker

    AsxBroker Well-Known Member

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    He's trying to say that you can rub it and feel rich :D
    As this wouldn't meet the sole purpose test..

    Cheers,

    Dan

     
  7. Martyvee

    Martyvee Member

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    Hi, I would imagine that gold being considered a hedge against inflation, therefore a means of preserving wealth, would be enough to satisfy the sole purpose test, but I'm definitely no expert.

    Gold has been considered "money" since the beginning of civilization, I'd be pretty peeved off if it was not allowed, especially considering what's been going on in the sharemarket since the credit crisis reared its ugly head. I think there are big things ahead for gold (and silver).

    Cheers guys.

    By the way, does anyone know any good resources for SMSF's, and/or any knowledgeable people on the subject in Adelaide?

    Thanks
     
  8. AsxBroker

    AsxBroker Well-Known Member

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    Hi Marty,

    I was trying to say

    "The object of the sole purpose test is to ensure that regulated superannuation funds (SMSFs) are maintained for the purpose of providing benefits to members upon their retirement, or their dependants in the case of the member’s death before retirement. The trustee of a regulated superannuation fund must comply with the sole purpose test to be eligible for the taxation concessions available to a complying superannuation fund" SMSFs - Sole Purpose Test - Wealth Within

    Hence, if you rub it (for gold) or walk into it (if your SMSF owns a property) by deriving a benefit before retirement, it may not meet the sole purpose test, hence don't rub it or walk into it. Your SMSF specialist will be able to help you with this.

    Cheers,

    Dan

    PS Speak to your Self Managed Super Fund specialist before making a SMSF decision.
     
  9. TonyC

    TonyC New Member

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    Location:
    Perth
    SMSF Gold

    Hello Martyvee, yes I set up an SMSF a couple of years ago and it is 95% gold bullion. At this stage it is unallocated gold in a depository account at the Perth Mint. The advantage of this system is no minting and storage/insurance fees; the disadvantage is that it is "paper" gold and I am an unsecured creditor of the Perth Mint - one of he safest mints in the world but it still leaves me with counter-party risk). To reduce this risk I am looking at converting half of my holdings from unallocated to allocated storage. Anyway, gold investing was the best investment choice I have ever made, and doing it within a SMSF provides great tax benefits. Do it!
     
  10. Rob G.

    Rob G. Well-Known Member

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    What tax benefits ? Unless you would have held gold anyway
    in your own name for a VERY long time regardless (i.e. past 60 yrs old).

    Any expenses such as admin & holding costs are not tax deductible, s.51AAA ITAA36 since you are holding solely for a capital gain.

    It also does not pay dividends to reinvest in alternative investments for diversification if you are trying to balance your portfolio.

    So you are forced to tip in more contributions yourself or sell down some of your investment to diversify/rebalance (maybe when the gold price has dropped -timing issues !) which incurs CGT.

    A SMSF that derives income partly from fully franked dividends ends up paying very little or zero tax and still enjoys capital gains whilst deducting expenses.

    So it again comes back to what part gold could play in your overall financial plan for your SMSF ... which of course your Auditor has reveiwed ???

    Cheers,

    Rob
     
  11. TonyC

    TonyC New Member

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    Gold & SMSF

    Marty
    Don't be put off by naysayers.
    - My SMSF has been operating with full statutory requirement audits for the past two years.
    - A super fund (industry or SMSF) is a very effective way of minimising tax on your investment; of course you have to take your age into account as you typically cannot access funds until you are 55+ yo.
    - Any holding costs associated with my gold (and these are virtually zero at present, but could become significant if I was to convert from unallocated to allocated gold - viz. fabrication, storage/insurance costs) are fully tax deductible within the SMSF.
    - We are in a commodities bull market at present; they typically last 15-17 years, and this one is likely to extend well past 2015 (great timing for me and my SMSF; but you have to make your own call on that) - anyway, for my money, gold is a far better bet at present than equities (again, your call).
    - The capital appreciation on my gold, to date, has compensated any foregone equity dividends (and equity capital gain) many times over (and it's only going to get better in the next couple of years).
    >>The upshot is that purchasing gold through an SMSF works very well for me, and I couldn't be happier with the decision I made in 2007 to take this route.
    TonyC
     
  12. nicray

    nicray New Member

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    Dear TonyC,

    YOu have been buying gold using SMSF. Do all the expenses incurred in buying gold and maintaining the SMSF account come out from your super fund or your own pocket ? I am actually considering doing the same thing but in the process of doing some research right now. YOur advice will be very helpful to me.
     
  13. Superman

    Superman Well-Known Member

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    Nicray,

    Yes - the SMSF purchases the gold investment as part of its investment strategy and all associated costs relating to the investment as well as the administration costs* relating to the operation of the SMSF are paid by the SMSF.

    *Please beware the annual administration costs of running a SMSF can be between $1000 to $4000 per annum. This needs to be taken into consideration when looking at the after fees return on any potential investment(s)

    Ensure any gold investment is made by a reputable company with a good history - I have seen a few gold scams out there that look legit but are anything but.

    Cheers
    SM
     
  14. TonyC

    TonyC New Member

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    Hi Nicray; Superman got it in one. BTW, I can recommend Perth Mint from personal experience. I'm sure there are many other reputable suppliers of precious metals in Australia as well.
    Regards
    TonyC
     
  15. Edwardo

    Edwardo New Member

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    Glen Waverley, VIC
    Hi TonyC,

    I was very interested in your experience, as I consider doing the same, buying via SMSF gold and silver, however did stumble upon a rather heavy setup fee (~$2K) and ~1K for annual audit and return.

    Am currently looking at esuperfund, which I found a few people here are using and cleardocs.com.au, which I heard of as well.

    Is your SMSF set up with an accountant or did you use one of the above or anything else? What are my risks of not doing it with the accountant?

    Cleardocs offer SMSF setup for less $200, including hard copy delivery, and it's incredibly cheap.

    Did anyone here used them for SMSF and happy with them? And the audit was ok?
     
  16. EdInvest

    EdInvest New Member

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    Location:
    Sydney, NSW
    Hi Edwardo

    This is my first post so hi all. I am a newbee to the SMSF experience too. I set up a corporate trustee and trust last month using cleardocs for all the documents. The set up process has gone well. I used a CCH book on Super to help. I will do my own accounts, investment strategy, etc.

    Two stumbling blocks I have found so far are:

    1. Doing the accounting myself - it is hard to know what format to produce the accounts in which leads to the second potential issue:

    2. Auditors are wary of auditing accounts that aren't prepared by a professional accountant (they either won't do it or will charge more).

    Cheers,

    Ed
     
  17. JPM Group

    JPM Group Member

    Joined:
    7th Nov, 2010
    Posts:
    21
    Location:
    Moorabbin, Victoria
    Hi Martin,

    We establish SMSF account for clients and have access to purchase Gold & Silver Bullion.

    As an advisor, we can also assist in providing the advice, rolling the funds, establish the accounts (via Macquarie CMA) and then place the orders on your behlaf.

    We also have access to ETF - Gold/Silver and other commodities which you may want to consider also to have a diversified spread.

    Send me an email to jmerchan@jpmgroup.com.au or contact my direct line on (03) 8581 1056.

    Talk to you soon,

    Regards

    James Merchan
    BBus (Finance), Dip FS [Financial planning]
    Director & Financial Advisor
    JPM Investment Group [AFSL 339151]
     
  18. TomKat

    TomKat New Member

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    Location:
    Donald, Vic
    The problem I see with that is although it allows you to purchase a portion of gold, it's not even in the country!

    Quote from company information.
    "The metal, to which the holder is entitled, is held by the custodian bank (HSBC Bank USA, N.A.) in vaults in London."

    That unsettles me somewhat.

    TomKat
     
    Last edited by a moderator: 20th Oct, 2013
  19. jorgon

    jorgon Active Member

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    Location:
    Brisbane
    Quite a lot of my clients do.

    In order to set up your fund, you could consider a DIY set up pack which is very cost effective and gives you the freedom to choose your own investments, accountant, and auditor.

    As for AsxBroker's point about the sole purpose test - this is a valid point but is not a problem with gold bullion. There is a problem with jewellery, coins (where the value exceeds the face value) and medallions which like other collectables cannot be kept at home, cannot be "used" by members and must be insured - this is under Regulation 13.18AA of the Superannuation Industry (Supervision) Regulations 1994.