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80% of Australians Don't Know They Can Hold Gold in Their Super

11 July 2018

This is the third article in a series of four about Australians investing in gold. Check out the first and second articles on our blog.
 
One of the most interesting insights from the recent ABC Bullion survey of Australians was the fact that over 80% of respondents didn’t realise they could invest in gold using their superannuation.
ABC Survey Question 5
This is a great shame, as, since the turn of the century, gold has outperformed the return on the average growth superannuation fund. More importantly, physical gold brings with it many diversification benefits to a portfolio, as it is uncorrelated to the equity market (which is where most growth superannuation funds are invested), and also tends to do very well when ‘real’ interest rates are low, as they are in Australia today. 
 
Part of the reason many Australians may not be aware that they can invest in gold using their superannuation, especially if they have a SMSF, is that the majority of superannuation funds in Australia choose not to invest in gold, and rarely - if ever - discuss the precious metal with their members. 
 
ABC Bullion’s survey asked which asset had performed best in the last 15 years, with over 56% of Australians responding that they thought the average superannuation fund had outperformed gold. They’re wrong.
 ABC Survey Question 5.1
In truth, it was gold that was the slightly stronger performer over the last fifteen years. But since 1999 the price of the yellow metal has risen by 272% compared to a gain of 215% for the average superannuation fund.
 
The chart below, which looks at AUD gold price performance as published by the World Gold Council, and the median return for growth superannuation funds published by Chant West, looks at the annual return for both gold and super funds over the past 18 years.
 ABC Survey Annual Returns
As you can see, the biggest annual moves in any calendar year occurred during the GFC, when super funds fell over 20%, whilst gold rallied by more than 31%, mostly owing to a precipitous fall in the value of the Australian dollar.
 
This data demonstrates why gold can be such a useful addition to a portfolio, either within your superannuation fund, or outside of it. Not only does gold deliver strong long-term returns (close to 9% per annum over the past 45 years), but it does best whenever broader financial markets, and more traditional portfolios like superannuation funds tend to do worst.
 
That is exactly the kind of wealth protection and balance that you would hope an investment in physical gold brings to a portfolio, and helps explain why savvy investors have so much faith in gold as the ultimate safe haven asset.
 
For investors wanting to know more about how to invest in gold using their superannuation, ABC Bullion offers two very useful guides:
  • For SMSF trustees, the ABC Bullion SMSF Trustee and Physical Bullion Report is a must read, containing the top 10 reasons for trustees to invest in gold, a look at silver, FAQs on investing in gold using an SMSF, and a case study which looks at costs, liquidity, security the and trade flexibility of gold.
  • For Australians without a SMSF, ABC Bullion also has the Superannuation and Physical Gold Investment Guide, which includes information on a retail superannuation platform (brightday) and managed fund (Cor Capital) which would allow investors to have exposure to real physical gold using their superannuation fund.