Superannuation: Why Investing In Gold Makes Sense

Holding physical precious metals is a simple and effective way to truly diversify your portfolio, helping you to build wealth over the years, whilst minimising risk along the way. Many Australians, including clients of ABC Bullion are concerned that their superannuation portfolios, many of which are highly concentrated in the share and fixed-income markets, are not sufficiently diverse, or safe. This is especially the case in the aftermath of the Global Financial Crisis (GFC), with debt levels continuing to rise, central banks printing money, interest rates at record lows and negative bond yields.  


 

You can invest in Gold using your Superannuation

ABC Bullion is Australia’s leading precious metal investment educator, and has a particular focus on the potential role of gold within superannuation funds. ABC Bullion assists its clients use their superannuation money to invest in physical precious metals in three ways:

1. Self-Managed Superannuation Fund Whitepaper
The annual ABC Bullion SMSF Trustee and Physical Bullion report is Australia’s most detailed source of knowledge for SMSF trustees looking to invest in precious metals. It covers the major reasons to invest in physical gold and silver, the key factors to consider, as well as case studies and FAQs. It’s also jam packed with charts and tables. Read more

2. Superannuation and Precious Metals Report
This report is for clients who are interested in setting up a SMSF and investing in physical gold. Read more

3. Our Relationship with Cor Capital
The Cor Capital Fund is an Australian Registered Managed Investment Scheme accessible to clients of ABC Bullion including those wishing to invest via their superannuation. The Fund has a strategic and significant allocation to physical gold at all times. Read more


ABC Bullion is also a sponsor of the SMSF Association, the peak body representing the AUD $590 billion SMSF Sector. ABC Bullion has been working with the association for some time, conducting educational webinars for trustees and professionals, the explain the role physical gold can play in an SMSF portfolio, with a focus on best practice for Australian investors with Self Managed Superfund


 

Physical Gold and Superannuation: The Last 15 years

There are a number of key reasons why Australian investors want to hold some of their investment portfolio in physical bullion. These reasons include the fact that:

  • Physical gold prices tend to rise most when ‘real’ interest rates (which account for inflation) are low, as they are all around the world today
  • Physical gold is uncorrelated to the share market, especially when the share market falls. This helps to balance a portfolio
  • Gold is a natural currency hedge for an Australian investor
  • Physical gold is highly liquid and has zero counter-party risk
  • Physical gold is a proven hedge against inflation as well as geopolitical and economic uncertainty

Physical gold also offers the opportunity for strong long-term returns, and has indeed outperformed the returns delivered by traditional superannuation funds since the turn of the century, by more than 2% per annum.

This is clear in the following charts, which plots the value of AUD $100 invested in physical gold in AUD, versus the value of AUD $100 invested in a retail superannuation fund, from the end of 1999 until the end of 2015.

The outperformance of gold versus traditional superannuation funds has continued in Q1 2016, with the gold price rising over 10%, unlike superannuation funds, which have struggled since the start of the year with increased share market volatility.


Source: Chant West, Cor Capital, IRESS, GF Data, Gold returns are gross of fees, super returns are net of investment fees but before admin and adviser commissions