Gold in Them Thar Pensions – Royal Mint Sells Gold Bars to Pension Savers

Those nervous about how markets will react whether we’re set to remain or heading for the exit on 24^th June may be interested to hear that gold bullion, often considered a safe haven in turbulent times, can now be held in Self Directed Personal Pension (SIPP) and Small Self-Administered Pension Schemes (SSAS).

Physical gold – bars and fractions of bars of a minimum 99.5% purity – can now be purchased on the Royal Mint’s bullion trading platform – although remaining stored in its vault; its Signature Gold scheme allows purchases from as little as £20, whilst a 1kg bar will set you back around £28,000.

Investors have to complete an application form available on the Mint’s website and send it to their SIPP provider where after they can buy and manage their investment online; investors are charged 1% p.a. + VAT annual fee.

It was announced that gold bullion was to be added to the permitted investments list for personal pensions in 2014 although investors have long had a range of choices if they wanted exposure to gold in their portfolio – physical gold, from companies such as Bullion Vault, Exchange Traded Commodities that track the price of gold and funds such as BlackRock Gold and General that may invest in miners and associated companies.

With a 1,000 track record in minting British coinage, the Royal Mint made it easier to invest in gold coins from 2014 and now includes ‘branded’ gold bars.

Chris Howard, Director of Bullion, said: ‘The move to make Royal Mint gold bullion available for holding within pension schemes opens us up to a whole new marketplace.’

To many investors, gold is seen as a way to protect the value of their investments against inflation and other financial hazards, although prices are currently some way below the record valuations seen in 2011.

‘gold is seen as a way to protect the value of their investments against inflation and other financial hazards’

From a peak of $1900 an ounce, prices fell to barely more than $1,000 last summer 2015, recovering early in 2016 as investors grew nervous about the prospects for global growth and other economic threats to current levels of just under $1250.

For those new to investing in gold should be aware that its price can be volatile, and subject to a wide range of influences such as large central bank purchases; if the US Federal Reserve were to increase interests rates this summer that could pose a threat to the gold price because such a move would make gold a less attractive investment proposition than other assets that generate interest, such as government bonds.

A US rate increase would also be likely to increase the price of the dollar, making it more expensive to buy gold and other dollar-denominated commodities.

Those wishing to avail themselves of an investment in gold bullion will need to check the small print of their existing or proposed SIPP account as it is likely that only those with a ‘full’ SIPP will be able to include gold.

UK gold Britannia and Sovereign coins are VAT-exempt and Capital Gains Tax-free which means you pay no tax when buying, holding or selling these; however high storage and insurance costs may deter some.

Royal Mint accounts will only offer HMRC-defined eligible products thus avoiding inadvertent tax charges that can come with SIPP investments in other tangible assets such as residential property, vintage cars, wine or art.

Gold is notoriously difficult to value, subject to seasonal demand, and unlike shares and bonds, it provides no income for investors, but it may appeal to those wanting to sit out whatever awaits us following the EU referendum; however, despite its recognised value as a hedge Danny Cox of Hargreaves Lansdown believes that a typical portfolio should contain no more than 5% investment in gold.