Gold bugs can now make the precious metal the cornerstone of their retirement plans. The federal government proposes to allow investors to hold gold and silver in their RRSPs.

Currently, precious metals aren’t qualified property for RRSPs and other tax-deferred plans. But if the new budget is passed, gold and silver will be. Ottawa proposes to expand the list of qualified property to include “investment-grade gold and silver bullion coins and bars, and certificates on such investments.”

It defines investment-grade gold as being at least 99.5% pure, and it demands 99.9% purity for investment-grade silver.

Legal tender bullion coins will qualify if produced by the Royal Canadian Mint and all, or substantially all, of their fair market value is attributable to their precious metal content. Bullion bars will qualify if a metal refinery accredited by the London Bullion Market Association produces them. And certificates will qualify if they are issued by a federally or provincially regulated financial institution and represent a claim on precious metal holdings of the issuing institution.

For all of these investments, the product must be acquired either from the producer of the investment or from a regulated financial institution. This change will be effective for investments made on or after Feb. 23, 2005.