Tuesday, December 13, 2011

Superannuation: Exposure to Precious Metals

For those readers who aren't Australian you can read about what superannuation is here, but essentially it's a retirement account similar to the US 401k accounts.
I seem to be hearing and reading a lot about superannuation accounts at the moment.

The Prince has been pumping out some excellent articles on Macro Business.

There has also been a change made to future payments where they will be increasing compulsory employer contributions incrementally to 12% (from 9%) between now and 2020:
On 2 November 2011, the Federal Government introduced the Superannuation Guarantee (Administration) Amendment Bill 2011 (Cth) ('the Bill') to move an increase in compulsory employer superannuation payments from 9% to 12% which is included in the Mineral Resources Tax Bill (Cth) ('the MRT Bill').

The Bill is expected to come into effect on 1 July 2013 and will gradually increase the compulsory employer superannuation payments until they reached 12% in 2020. In the Second Reading Speech of the Bill, the Hon Bill Shorten MP, Minister for Financial Services and Superannuation ('the Minister') explained that the "Superannuation Guarantee charge percentage will be increased gradually and modestly with initial increments of 0.25 percentage points on 1 July 2013 and 1 July 2014. Further increments of 0.5 percentage points will apply annually up to 2019-20, when the [Superannuation Guarantee] rate will be set at 12 percent." commun-iT
A larger percentage being put aside means that individuals should be even more diligent that they are managing their account appropriately.

The Australian precious metals community has been hot on how to best manage your own super using a Self Managed Super Fund or SMSF (see this dedicated sub-forum on Silver Stackers).

I have also received several emails over the past couple of months in relation to how I manage my own super.

Personally I don't want the hassle or additional expense that comes with a SMSF, however I do want exposure to precious metals through my account.

Spectrum Super is one of the funds who provide easy access to precious metals exposure without the need for a SMSF (my super account is with Spectrum). 

Spectrum allows direct share investment in ASX300 listed companies as well as the option for other related securities.

You can view all of the listed securities they provide access to on this page: Listed Securities.

From those on the linked list, below I have extracted those which I know to provide Gold/Silver mining exposure (there may be others I've missed, so be sure to do your own research into all available options):

Adamus Resources Ltd (ADU)
Alacer Gold Corp. (AQG)
Ampella Mining Ltd (AMX)
Gryphon Minerals Ltd (GRY)
Independence Group NL (IGO)
Indophil Resources NL (IRN)
Integra Mining Limited (IGR)
Intrepid Mines Limited (IAU)
Kingsgate Consolidated Ltd (KCN)
Kingsrose Mining Limited (KRM)
Medusa Mining Limited (MML)
Newcrest Mining Ltd (NCM)
OceanaGold Corporation - CDI (OGC)
PanAust Ltd (PNA)
Perseus Mining Limited (PRU)
Platinum Australia Limited (PLA)
Ramelius Resources Ltd (RMS)
Regis Resources Ltd (RRL)
Resolute Mining Ltd (RSG)
Rex Minerals Ltd (RXM)
Silver Lake Resources Ltd (SLR)
St Barbara Limited (SBM)
Teranga Gold Corporation (TGZ)
Troy Resources NL (TRY)

Disclosure: I currently hold SLR, TRY, NCM, IGR, KCN & PRU in my super.

They also allow the following (not in the ASX300):

Perth Mint Gold (PMGOLD)
Perth Mint Gold ("PMG") is a right created on-market by The Perth Mint to enable you to invest in gold on the Australian Stock Exchange ("ASX"). PMG is structured as a call option in accordance with the ASX’s AQUA Rules, which cover exchange traded funds and structured products. Each PMG entitles you to physically acquire one hundredth of a troy ounce of fine gold and may be exercised by you at any time. 
PMGs trade on the ASX under the code PMGOLD and can be purchased by investors only on the ASX. 
The ASX price of the PMG is intended to track closely the international over-the-counter market spot price of gold and will be based on the market value of the gold backing a PMG at the time of purchase. Perth Mint
Essentially PMGOLD provides exposure to the spot price of Gold (AUD).

I am sure there are other super companies that provide the same or similar exposure and investment choices, but there are also definitely those who don't.

If your super is currently with a provider who does not give you access to direct shares or other precious metals exposure then consider rolling your account to one that does.

If you want to purchase and hold physical bullion in a Self Managed Super Fund then it is my understanding you are able to do this as well (as long as purchased and stored appropriately), this from e*superfunds PDF on Metals, part of their learning modules:
Physical Metals
ESUPERFUND clients are permitted to invest in Physical Metals and Commodities including Gold and Silver directly. For more details please visit our website at www.esuperfund.com.au.

Metal and Commodity CFDs
ESUPERFUND clients are permitted to trade Metals and Commodities using CFDs with CMC Markets. CMC Markets CFDs allow your SMSF to invest in a wide range of Metals and Commodities including but not limited to, Agriculture, Energy, Gold, Silver, Oil, Coffee and Sugar. CFDs allow you to bypass standardised futures trade sizes and trade smaller quantities.
e*superfund comes highly recommended and they currently have what looks like a decent fee discount on new accounts (only 2 days left to take advantage though):
If you apply to establish a SMSF on or before 15 December, 2011, it is FREE to set up your own SMSF with ESUPERFUND under our current Promotional Offer.  This is a saving of $699.  In conjunction with our FREE 2012 Annual Compliance Fee Offer this is a total saving of $1,398, unprecedented in todays market. e*superfund
Hopefully this post provides enough information to get you started on ways to increase your exposure to precious metals through super.


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  1. Great post! I've often wondered about how I could invest in PM's through my super but also didn't want to go to the hassle of a SMSF. I'll check out spectrum. Cheers.

  2. Superb writing BB! Many thanks. I'll definitely be checking this out over the Christmas break. I have many of the miners out of super that you have in super.

    Any thoughts on how KCN will go medium-long term? When I bought in winter, it seemed good but the market hasn't appreciated it for months now. I'm looking for a longer ride though and am not worried.

  3. Glad you guys will find this info useful.

    re KCN I am largely bullish on them due to their Silver/Gold mix. It should only take the spot price of Silver to double before the Gold they are mining at Chatree ends up free due to the Silver credits and the Bowdens project looks promising as well. At the Sydney Gold Symposium I believe they were talking about 10m oz per annum production initially from high grade pockets of the Bowden's project, throw in a $100 Silver price and say $20 per ounce costs and you can see why I would be bullish on KCN!

    From a technical view point it looks like KCN should have decent support at $6 per share and the upside over the medium term is particularly appealing.

  4. Thanks for pointing out spectrum super. I had no idea you could do something like this without being a SMSF.

  5. BB,
    I am with Unisuper, not sure if it is a good thing or a bad thing but growth ain't that good. Unisuper only provides a limited options to investment, they have a set (i.e. balanced, growth etc) and I have to chose the set.

    But you are saying that Spectrum Super(correct me if i am wrong) lets you chose which securities to invest in? E.g. with 10K in super, i can select 50% in PMGOLD and 50% in GRY? is that correct?

  6. There are rules in place, for example generally a maximum of 80% can be invested directly, you need to leave enough cash in the account for fees and insurance payments, etc.

    But yes you have the idea, you can select individual securities to purchase through a Spectrum account. So potentially you could put 40% into PMGOLD and 40% into GRY (leaving 20% in cash), although most wouldn't recommend such an unbalanced portfolio.

    Spectrum aren't the only provider that allows it, for example Australian Super was another I came across while reading last night:


    Hope that helps!

  7. Thanks BB that helps.
    That portfolio mix was for example sake :-)

  8. Perth Mint's default fund is Spectrum Super, which is why PMGOLD is listed, because I asked them to add it to their list of approved securities.

    I think it is a very good platform and worth looking at.