Can my SMSF Invest via Perth Mint?
Absolutely, your SMSF can invest through Perth Mint. Like any other SMSF investment, it must comply with superannuation laws (SISA) and regulations (SISR). The most popular investment an SMSF would seek from the Perth Mint is physical gold and silver bullion. Platinum can also be purchased from the Perth Mint, along with collector coins and jewellery.
Gold and silver bullion via an SMSF can be part of a fund’s investment strategy to diversify its portfolio. This is especially relevant given the growth in gold prices, which have risen from $500 per troy ounce to over $6,500 per troy ounce since 2000. Considering the inflationary and turbulent times the world faces today, bullion is often seen as a strong alternative investment option. Gold prices can be volatile, so it’s important for a fund’s portfolio to maintain an appropriate risk balance.
How do bullion investments work in an SMSF?
An SMSF investing in physical bullion has to ensure the investment aligns with SISA and SISR, such as:
- the investment is made to solely provide for the retirement of the members know as the Sole Purpose Test
- it must be a permitted investment by the fund’s trust deed and investment strategy (when SMSF Australia helps prepare these documents bullion is always an included option for trustees)
- it cannot be acquired from a member or other related party – evidence of the acquisition in the fund’s name is crucial
- it has to be stored securely
- capable of being valued independently with supporting evidence
- evidence to support the existence of the bullion on 30 June
- the bullion must be insured in the name of the fund
Investing in gold and silver bullion typically involves bullion coins, minted bars, and cast bars. Standard bullion coins, valued at the spot metal price, are not considered collectables. However, gold or silver coins are regarded by the ATO as collectables when their value is likely to surpass their face value. A collectable coin costs more than the spot metal price that underpins it, thanks to artistic designs, and its value is increased by its rarity and other historical features. Investing in collectables via an SMSF involves stricter requirements, such as specific rules on where a collectable can be stored, and the collectable must be insured in the fund’s name within 7 days of acquisition.
How do SMSF bullion investments work with the Perth Mint?
The Perth Mint is owned by, and its liabilities are guaranteed by, the Western Australian government, a unique arrangement worldwide. SMSFs make up approximately 10% of depository customers, with many holding between $ 100k and $500k in precious metals. An SMSF can buy physical gold, silver, and platinum in the form of bullion coins, minted bars, and cast bars in different sizes.
The Perth Mint produces both investment-grade gold, silver and platinum coins for collectors and internationally traded bullion in various weights and sizes. Gold bullion coins feature attractive designs.
Cast bars are stamped with the Perth Mint logo and the weight and purity of the bar being produced, and are cheaper to produce than minted bars, which incorporate a kangaroo or lunar dragon motif in addition to the features included in a cast bar.
The Perth Mint can support SMSF bullion purchases and provide supportable evidence to satisfy the SMSF auditor, such as:
- Invoice to show the purchase is in the name of the SMSF.
- Market valuation of gold, silver, and platinum is updated every five minutes on their website.
- The bullion can be stored in high-security vaults with the title of the SMSF attached to the specific bars acquired.
- The Perth Mint can provide the SMSF auditor with independent confirmation and details of the fund’s holdings.
- Trading can be conducted online through the Perth Mint depository or the Perth Mint depository programme, which is modelled on a traditional brokerage service.
- Storage fees are charged by the Perth Mint and do not include insurance costs as the investment is guaranteed by the Western Australian government.
Hint – Unallocated storage is provided by the Perth Mint, but this would not be appropriate for an SMSF as the auditor would not be able to identify it.
Competitors of the Perth Mint
Of course, there are several options besides the Perth Mint that are acceptable for SMSFs. As long as the investment also complies with superannuation laws and regulations, an SMSF can invest in physical gold or silver bullion.
Australian-based competitors include but are not limited to:
Hint – Competitors typically include insurance for stored bullion, often arranged through Lloyd’s of London, and the SMSF title is linked to the specific bullion it holds in storage. Unallocated storage options are generally not suitable for SMSFs.
Other Options – ETFs
Using ASX-listed exchange-traded funds (ETFs), such as PMGOLD, which tracks the spot price of gold, allows an SMSF to trade in gold without some of the stricter superannuation rules discussed above.