Synopsis: SIPP and SSAS investors can now buy gold bullion from the Royal Mint.
The Royal Mint has announced that its gold bullion can now be held in SIPPs and SSASs. Investors will have the choice of 100gm or 1 kg bars or a fractional purchase of a 400oz (11,340gm) ‘Signature Gold’ bar, all of which have been approved by HMRC. Gold coins, which carry a higher premium to the gold price than bars, are not available to pension investors.
The gold must be bought via an account established with the Royal Mint and kept in ‘The Vault’, its on-site bullion storage facility. This means it attracts storage fees, equivalent to 1.2% a year for ordinary bars and 0.6% for a share in a ‘Signature Gold’ bar. There is a buy back facility, with a 1% charge for ‘Signature Gold’, but no publicly disclosed charge for other bars. At the time of writing Royal Mint were asking £2,937.19 for a 100 gm bar (99.99% pure). The corresponding value based on the spot gold price was £2,820.77 (note that the gold price is quoted in troy ounces, rather than the normal ounce measure).
While the timing of the announcement is attributed by Royal Mint to internal developments, it cannot be completely coincidental that the facility becomes available within a few weeks of 23 June and the referendum vote. Gold is priced in US dollars and if the majority of economists are right, a Leave victory could push down the value of sterling which would make gold worth more in sterling terms, even if its price remained unchanged in dollars.
Buying gold bars – or shares in bars – is generally an expensive way to gain access to bullion. These days a much easier route is to use Exchange Traded Commodities (ETCs), listed in London. The most popular of these are backed by physical gold held in London, as the investors have become wary of derivative-based ETCs. These ETCs offer a cheaper and simpler way to hold or trade gold. For example, the $1.25bn iShares Physical Gold ETC has a TER of 0.25% and its annualised return since launch in April 2011 is 0.24% less than that achieved by the gold price. Mind you, both are in negative territory (-3.67% against -3.91%).
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