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In the age of meme stocks, gold is a stable investment that doesn’t experience the same volatility as stocks and other tradable assets. If you are looking to hedge against large drops in the market, you may want to look into gold as a way to protect your wealth. Read on to learn how to buy gold in Canada.
If you want to gain exposure to gold, there are a few ways to go about it.
Gold bullion refers to gold that is at least 99.5% pure and has been transformed into bars or ingots or minted into coins. Bullion is the form in which gold is traded on commodities markets around the world.
You can invest in gold on the stock market by profiting from gold prices rather than physically owning gold. Stock market investors can buy shares in companies that have gold exposure, such as gold miners, or they can buy units in a gold-themed exchange traded fund (ETF).
With this approach, you don’t actually buy any gold. Instead, you invest in the performance of the gold industry or the mining company. If you want to invest in gold on the stock market, you need a full-service broker or you can do so by opening an account on an online trading platform.
Investing in gold on the stock market means you don’t have to go through the hassle of buying, storing and insuring it. When you buy shares of a gold mining company, that company is responsible for the mining and storing of gold, and you become a share owner of the company itself. However, because you don’t own any actual gold, it exposes you to all the usual risks that the stock market carries (market volatility, company bankruptcy and the possibility of losing your investment, etc.).
When you buy units in a gold-themed ETF, you’re tracking the price movements of the commodity itself or stocks in multiple companies with gold exposure. See examples of gold-themed ETFs listed below:
An alternative to buying gold stocks or units in an ETF is to speculate on price movements through CFD investing in the futures market. CFD investors seek to profit from bond price movements – whether up or down. That means that even if gold prices are falling, CFD investors can still make a profit. However, because CFDs can be highly risky and are complex derivative products, gold CFDs are better suited to advanced traders. You can read more about CFDs in our detailed guide.
Buying storing physical gold allows you to get your hands on a tangible asset and avoid the risks associated with the stock market.
If you decide to buy physical gold, you’ll then need to consider what form you’d like to acquire. You can buy gold bullion in bars or in coins. Bars are larger and therefore more expensive, but they are an effective option if you’re looking to make a sizeable investment. Gold coins are smaller and less valuable, so they can be a more convenient option when you need to liquidate some of your investment.
Gold bars generally range in size from 1/10oz (ounces) to 1kg, but there are bars of up to 500oz available. Remember that precious metals use troy ounces and that one troy ounce equals 31.1 grams.
There are 2 types of gold bars: cast bars and minted bars. Cast bars are produced by pouring molten gold into an ingot mould, while minted gold bars are manufactured via a minting or stamping process. Cast bars are cheaper to produce, but minted bars look better and are generally easier to sell.
Mints around the world also produce gold bullion coins. Typically smaller than bars and ingots, they’re generally considered to be a more convenient option for many investors. Not only are they cheaper to buy, but they also make it easier to liquidate a small portion of your investment when you need cash. Coins contain between 1/10oz and 1oz of pure gold.
These coins also have a nominal monetary value and can be accepted as legal tender in the country where they’re made – examples include the Australian Kangaroo, the American Gold Eagle, the Canadian Maple Leaf and the UK’s Gold Sovereign.
There are several options to consider when choosing where to buy gold in Canada, so make sure to consider the following factors before deciding where to buy:
Like silver, gold is considered a stable investment that retains its value. Before you invest in gold, you’ll want to consider whether you want to buy, store and insure physical gold, invest in gold on the stock market, or use CFDs to trade gold. Regardless of how you choose to invest in gold, remember that, like all investments, it carries risk.
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