James Jones-Tinsley: The Brexit Sipps gold rush

Who could have predicted the political machinations that have unfolded since the UK narrowly voted ‘Leave’ on June 23rd, with more sackings and resignations in the last three weeks, than during a normal week at Leeds United. Although we now have a new Prime Minister and an Osborne-free Cabinet, it is likely that the UK now faces months, if not years, of political and economic uncertainty, as we seek to cut the metaphorical umbilical cord from our European matriarch.Against such a backdrop, assets traditionally regarded as ‘safe havens’ always benefit from ‘interesting times’ such as these, and it is perhaps no coincidence that, according to data released by The Pure Gold Company, the number of people investing part of their pension in the precious metal rose by 26% during the three months to June 2016, with an average purchase of gold, via a SIPP, of £35,000.Investment grade gold Bullion can be held as an asset of a SIPP or SSAS, and will not constitute ‘taxable property’, provided that it is in a form acceptable to HM Revenue & Customs (HMRC). This is currently defined as a bar or wafer with a purity of not less than 995 thousandths, and professionally stored.In addition, in August 2014, the Financial Conduct Authority added physical gold Bullion to its list of “standard assets”, in anticipation of the new capital adequacy regime for SIPPs that is due to commence from September 2016.This possible ‘flight to gold’ comes as the Royal Mint recently announced that, for the first time, it is opening up its vaults for investors wishing to hold gold in a SIPP or a SSAS.Chris Howard, director of bullion at The Royal Mint, said that the bullion — specifically Royal Mint Refinery gold Bullion bars, and “Signature Gold” bars — have been authorised by HMRC and HM Treasury for holding in pensions.Accounts for pension schemes are structured to ensure that only HMRC-defined eligible products are available to purchase, and all purchases go directly into storage at “The Vault”, The Royal Mint’s secure precious metals storage facility located in South Wales, (as opposed to Hatton Garden).The Royal Mint offer a “Buy Back Facility”, where the money remains in the SIPP member’s Royal Mint account until they advise the provider to return the money to their pension fund.The fees for Royal Mint Refinery gold Bullion bars are 1% plus VAT a year, and 0.5% plus VAT a year for “Signature Gold” bars, based on the average daily market value of the total gold holding.As the Brexit negotiations commence, time will only tell if a new ‘gold rush’ is experienced, via self-invested pensions. Personally, I believe that gold will always have a part to play in a well-structured and diversified investment portfolio, and the access to actual gold that The Royal Mint’s new offering provides, will certainly appeal to some investors, as opposed to merely holding units in commodities-based collectives. But – given that both Sterling and equities have already reversed their position, from initial ‘shock-based’ falls – I don’t believe that we will witness a ‘Klondike-esque’ migration to gold as a major asset class, amongst SIPP and SSAS investors.

James Jones-Tinsley: The Brexit Sipps gold rush

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