Following the volatility of stock markets since the beginning of the year, it is not surprising that cautious investors are asking their advisers if gold could be acquired in their self-administered pension. A number of years ago the Revenue Commissioners confirmed that self-administered pension schemes (Self-Administered Pensions, Personal Retirement Bonds & Approved (Minimum) Retirement Funds) can hold gold bullion up to a maximum of 10% of the value of the portfolio.
There are a number of options available to investors seeking to acquire gold for their self-administered pension structure:
- PHYSICAL BULLION – You could buy physical gold bullion (investment grade) however this would need to be stored in a safe secure facility and insured.
- GOLD CERTIFICATES – could be acquired either unallocated or allocated. The Perth Mint Certificate Programme appears to be the only government backed programme available.
- Gold Fund / ETF – alternatively a fund based structure or Exchange Traded Fund could be used to acquire a gold investment in the scheme.
A self-administered pension structure has a distinct advantage over insured arrangements when it comes to investment, both in respect of gold and investments in general. An insurance company is prohibited from holding precious metals directly. A self-administered pension structure allows the creation of a portfolio specifically designed for the client.
There are downsides to investing in gold:
- Like any other asset class, the price of gold can rise or fall
- The amount you will get on exit will be determined by the price when you sell
- Gold does not pay any dividends or coupons
- You may have to pay extra charges for storage and insurance of your gold
- A Government backed programme does not mean the original capital is guaranteed
Gold has historically been seen as a way to diversify a portfolio’s risk because it tends to outperform in times of uncertainty.
When considering an investment in gold, it should only be done as part of a well-diversified portfolio. Ultimately, any decision to invest in gold or any other asset class needs to be done following consultations between the investor and their advisor.