Gold and Superannuation Funds

One of the things that our clients often ask us is whether or not they can buy gold using their superannuation funds, which is understandable, as superannuation is going to be the largest financial asset that many Australians build.

It will be particularly important for Gen-X and Gen-Y Australians, as they will be contributing 9% or more of their salaries every year for their entire working life, with it being very likely that a Gen-X or Gen-Y couple could contribute over one million dollars into superannuation across their working life.

This edition of Bullion University looks at the opportunity for Australians to invest in gold using their superannuation.

What does my super fund invest in today anyway?

Each and every superannuation fund has slight differences, but in general they follow what are called Strategic Asset Allocation (SAA) guidelines, which stipulate the percentage of the portfolio that should be invested, in what the industry considers, growth assets like shares and listed real estate, but also in defensive assets like government bonds and cash.

For most Australians who are in ‘balanced growth’ funds, the split between growth and defensive assets is typically 70% in growth assets and 30% in defensive assets. The following table is instructive in terms of asset allocation for the industry as a whole.


In terms of returns, these portfolios had their best year in nearly two decades in 2013, returning over 17% on average. That’s where the good news ended, with the 7 year to end 2013 return only 4.2% per annum, according to data from Chant West.

For reference, that’s barely better than cash in the bank and only marginally ahead of the rate of inflation. This to me would be pretty frustrating considering we are compelled to put over 9% of our money into Superannuation, and the managers get to charge asset based fees, meaning they get a pay rise every time we put money in.

As you’ll see from the graph, the one asset class that has no representation in mainstream portfolios is physical gold. Some portfolios might have a small exposure to a broad commodity basket, but on average it would be fair to say that traditional superannuation funds have a less than 1% exposure to physical gold.

If you want gold in your superannuation fund, you’re going to need to make it happen yourself, or with the help of a licensed financial planner.

How do I get gold into my superannuation fund?

There are three different ways to get gold exposure into your superannuation portfolio.

The first of these is by having exposure to a gold ETF. As I mentioned earlier some of the more traditional funds would probably use ETF’s (or the futures market) when and if they decide to hold a tiny allocation to gold on behalf of the Australians investing in their fund.

If you are working with an adviser or using a specific superannuation platform, it might be possible to buy a gold ETF using that platform, although not everybody in traditional superannuation will be able to do this.

The second way to get gold exposure is via gold mining shares. If you are in a traditional superannuation fund, you will have some exposure already, mostly as a result of the fact that Newcrest mining is a multi-billion dollar enterprise and one of the larger companies listed on the Australian stock exchange.

As a result, you’d have some de-facto exposure to Newcrest and some other gold miners, as Australian superannuation funds have a large allocation to the broader Australian stock market.

If you are working with an adviser or using a specific superannuation platform, it might be possible to buy a gold mining ETF, some specific stocks or gold mining company managed funds, but again this is not something everybody will be able to do.

Finally, if you are looking to buy real physical gold for now the only way to do this is via a Self Managed Superannuation Fund (SMSF).

SMSF’s require a little more work in terms of setting one up, and there are some ongoing obligations in running one, but there are a number of advantages, including the ability to save on fees over the long run, and additional investment flexibility in terms of what you can invest in.

For a longer read on the ability to save money and to broaden your investment options using a SMSF, please read the following two blogs.

For me personally, the ability to invest in physical gold (as well we as the ability to save money over the long-run) was the major attraction in setting up a SMSF.

I preferred buying and holding physical rather than an ETF because I wanted security of ownership and also didn’t want to pay an ongoing annual management fee (which ETF’s charge even though you don’t see them).

I also preferred physical to gold mining shares (although I do own some) because physical gold is proper wealth protection, whereas gold mining companies, which can be highly profitable, also leave you exposed to a whole range of additional risks, including management and political risks.

Note that my preference for physical gold in my SMSF is in no way meant to disparage gold mining companies (after all without gold miners there’d be no gold industry) nor gold ETF’s, which I think have done a great job in broadening the appeal of gold as an asset class to a wider range of investors.

Should I have gold in my superannuation fund?

We can’t provide financial advice, only education as to the opportunities that precious metal investment offers in the current environment.

Your superannuation, and indeed a broader investment portfolio, is something that should be unique to your needs and wants, with factors like age, income, when you want to retire, family status etc. are all considerations.

For me personally, I’m glad I have a SMSF with a very heavy allocation to precious metals, but that would most definitely not be appropriate for everyone, and it’s not something I would ever recommend.

What I can say though is that its very obvious that superannuation is going to be a major asset that the majority of our clients contribute to and build, so it makes sense to want to maximise that asset, and investing some time in it would seem worthwhile.


As discussed above, traditional Australian superannuation funds have very little, if any, gold exposure at all, save for some gold mining companies, which would predominantly be shares in Newcrest mining.

It is possible in some instances to own gold ETF’s, gold mining company managed funds or specific gold companies through a traditional superannuation platform, although this is not always the case.

To own physical gold or silver as part of your portfolio, one must have a SMSF, which whilst it involves a little more paperwork, offers a range of benefits to Australian investors, including potential cost savings, and a wider range of investment possibilities, depending on your circumstances.

Finally, whilst this article, like all of the materials we publish is educational in nature only, and does not contain nor purport to contain specific advice, investing some time and effort into maximising your superannuation is a good idea, as it will be a key financial asset for most Australians.


This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

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