According to data released by The Pure Gold Company, the number of people investing part of their pension in the precious metal rose by more than a quarter (26%) over the last three months.
The average purchase of gold through a Sipp is £35,000 ($50,899, €44,732), said the company.
The Financial Conduct Authority (FCA) gave the go ahead for physical gold to be included in Sipps in 2014, although it needs to be at least 99.5% pure to qualify.
In January, a six-year low for gold prices saw investors piling into the commodity, said Joshua Saul, chief executive of The Pure Gold Company, speaking to International Adviser.
“At the beginning of 2016 the equity market was an all-time high and with the gold price sitting at a six-year low – people quickly saw the benefit of converting their gains to benefit from physical gold’s long term buying opportunity,” he said.
Coupled with fears over stock market volatility and the looming possibility of a Brexit, the rise in demand for gold resulted in a price jump of 17% since the start of the year.
Royal Mint
It comes as the Royal Mint announced on Wednesday that it will now offer savers the chance to buy gold bars as part of their pension funds for the first time.
Investors will be able to buy 100g or 1kg bars for around £28,000 or they can opt to purchase and own a share of a 400oz gold bar. However, they cannot hold Royal Mint bullion as part of their pensions because the products have not been authorised by HMRC.
A charge of 1% a year applies, plus VAT.
Auto-enrolment driving demand
Saul believes that savers are taking a greater interest in their pensions, especially in the long-term stability of gold, since the introduction of auto-enrolment in the UK in October 2012.
The system means that all large employers in the UK must offer a workplace pension scheme and automatically enrol eligible workers in it. This will be extended to all businesses by 2018.
“Purchasing physical gold tends to be more of a long term investment designed to create safety, security and protection from financial markets.
“Owing to the recently introduced requirement for all employers to offer their staff pensions, people are taking more of vested interest in their retirement,” said Saul.
Hedge
Describing the Royal Mint’s offering as a “pricey way to hold gold”, Danny Cox, from investment platform Hargreaves Lansdown, said that buying exchange traded funds (ETFs) was a cheaper way to invest in it.
“An ETF can give you the same exposure for around a third of the annual cost and can be bought in a low cost Sipp alongside other fund and share holdings, and also in Isa,” he said.
