Gold has been a reliable store of value for over 5,000 years. Not only has it withstood the test of time, but it continues to offer benefits to your portfolio today. Including some gold in your RRSP will offer you diversification from the performance of your other traditional investments.
Rules and Regulations for Adding Gold to Your RRSP
Adding gold to your RRSP requires that you follow some basic CRA guidelines. You must first open a self-directed gold RRSP with the administrator in order to include the yellow metal. This is sometimes known as a Gold RRSP even though you can also keep other investment types in the account. It will involve choosing a custodian to hold the gold for you. Most RRSP administrators and custodians will agree that gold you have in your RRSP can not be stored in the privacy of your home or local safe deposit box. The custodian will monitor, maintain, and store your gold bars and coins for you.
You also are not allowed to purchase the gold coins or bars yourself and transfer them into your RRSP. The administrator of the RRSP does this for you. You simply consult with them about the type of gold you would like to have. They will place the buy orders and arrange for transportation and insurance to the gold administrator you have selected. The money has to come from your RRSP account. The CRA strictly enforces this rule and will not allow you to keep any personally acquired or transferred gold in your account, even if you only hold it for a single day. This saves you the hassle of trying to figure out where to buy your gold coins and how to safely get them to your custodian.
You may also sell the gold without any tax penalties so long as you keep it in the account. If you ask the administrator and custodian to send the gold to your home before you reach the retirement age, then it will be treated as a distribution. This would incur 10% early withdrawal penalties plus taxes. Once you reach the retirement age, you will be allowed to either sell the gold to take distributions in cash or to receive the physical gold itself as a distribution.
RRSP Approved Gold Coins and Bars
There are also specific rules for the types of gold coins and bars you can add to your RRSP. The CRA rules do not permit you to purchase collectible coins or graded and certified bullion coins for these accounts. Gold coins and bars must have at least .995% purity. This means 24 karat gold coins or American Eagle 22 karat gold coins are required. Any international gold coins also have to come from CRA approved foreign mints. Coin sizes can be whole ounce, half ounce, quarter ounce, or tenth ounce coins. The following coins and bars are approved for your RRSP:
American Eagle Gold Coins
Canadian Maple Leaf Gold Coins
American Buffalo Gold Coins
Austrian Philharmonic Gold Coins
Australian Kangaroo/Nugget Gold Coins
Credit Suisse Gold Bars
Johnson Matthey Gold Bars
Benefits of Adding Gold to Your RRSP
Gold provides you with several distinctive advantages in your RRSP. It diversifies your retirement portfolio from other assets and their risks. This is because gold has a negative correlation with many traditional investments like stocks and bonds. The yellow metal is renowned for its ability to safeguard your retirement accounts from volatile markets and these risks.
Gold is a tremendous hedge against inflation and currency devaluation. It has served as a protection against governments devaluing their currency or printing money throughout all human history. As dollars and other currencies decline, gold rises. Inflation and currency debasement mean that the dollar has already declined over 90% of its value versus physical assets such as gold in less than fifty years.
Gold also gives you long term price appreciation that is tax advantaged. Historically the yellow metal has risen over the long term. You do not pay any taxes on the gains in your gold value so long as the gold remains in your RRSP. Even if you sell it and keep the proceeds in the account, you will not have to be taxed on them until you take them as a distribution.