How to buy gold in Canada
Before you invest in gold, compare gold dealers, gold stocks and online brokers to find the best way to buy gold in Canada.
In the age of meme stocks and economic and political instability, 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 consider investing in gold as a way to protect your wealth. Read on to learn how to invest in gold and how to buy gold in Canada.
How to buy gold in Canada: choosing the asset type
If you want to gain exposure to gold, there are a few ways to invest in gold in Canada.
- You can buy and store physical gold
- You can invest in gold ETRs or gold stocks
- You can trade gold on the financial markets as contracts for difference (CFDs).
What is the price of gold per oz in Canada now?Real-time data for commodities is provided by market makers, not the exchanges. Prices are indicative and may differ from the actual market price.
Buying and 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 need to consider what form you’d like to acquire. You can buy gold bullion in the form of gold bars or in coins:
- Bars: These are larger and therefore more expensive, but they are an effective option if you’re looking to make a sizeable investment.
- Coins: These smaller and less valuable, so they can be a more convenient option when you need to liquidate some of your investment or you have less money to invest with.
At most institutions, there is a limit to how much gold you can purchase daily. For instance, most banks have a daily limit of around $10,000 worth of gold, but this can vary. Whether you are a customer or not may also influence your daily purchase limit and even purchase price.
Compare Canadian gold bullion dealers
Gold bullion refers to gold that is at least 99.5% pure and has been transformed into bars or ingots or minted into coins. Gold bullion is the form in which gold is traded on commodities markets around the world.
You can invest in gold stocks to profit from gold prices rather than physically owning gold. With this approach, you don’t actually buy any gold. Instead, you invest in the performance of the gold industry or the mining company.
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).
If you want to buy gold stocks, you need a full-service broker or you can do so by opening an account on an online trading platform.
Buying gold stocks or ETFs 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.).
How to buy gold ETFs in Canada
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:
Sprott Physical Gold Trust (TSX: PHYS)
Created in February 2010, the Sprott Physical Gold Trust is a closed-end trust that invests in unencumbered and fully-allocated London
Good Delivery (LGD) gold bars.
- MER fee: 0.42%
- 1 Year performance: 7.16%
- 5 Year performance: 7.66%
Horizons Gold ETF (TSX: HUG)
The Horizons Gold ETF was created in 2009 and seeks to replicate the performance of the Solactive Gold Front Month MD Rolling Futures Index ER.
- MER fee: 0.30%
- 1 Year performance: -4.62%
- 5 Year performance: 4.55%
Created in 2004, the SPDR Gold Shares ETF and is the largest physically backed gold ETF in the world. Shares in the fund represent units of fractional undivided beneficial interest in, and ownership of, the SPDR Gold Trust.
- MER fee: 0.40%
- 1 Year performance: -3.26%
- 5 Year performance: 6.79%
Royal Canadian Mint – Canadian Gold Reserves (TSX: MNT)
Created in 2012, the Canadian Gold Reserves fund offers Exchange-Traded Receipts (ETRs) that represent an undivided beneficial interest in gold bullion held in custody by the Mint but owned by ETR holders.
Unlike an ETF, which lets you invest in gold-related companies and interests, this ETR lets you actually own physical gold. Instead of storing it yourself, though, the gold is stored by the Mint.
- MER fee: 0.35%
- 1 Year performance: 0.25%
- 5 Year performance: 5.49%
How to investing in gold via CFDs
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.
Compare Gold CFD providers
How do you find the best place to buy gold in Canada? 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:
- Location. There are a number of gold dealers around Canada, so the location of those dealers will influence your decision if you plan on buying gold in person. Check out Bullion Directory to find a gold bullion dealer in your province.
- Online options. There are also many online dealers that allow you to conveniently buy gold bullion online. As well as specialist dealers, you can also buy gold through marketplaces such as eBay and even arrange purchases through precious metal forums. However, as is always the case when spending money online, you’ll need to make sure you know who you’re dealing with – do some research to find out whether the seller is reputable and trustworthy.
- How the gold was produced. You’ll also need to find out where the dealer gets their gold from. Is it refined and produced by an established and recognized manufacturer?
- Bullion DNA (for gold and silver maple leaf 1 oz coins). The Bullion DNA technology prevents counterfeiting by scanning and detecting the authenticity of Gold Maple Leaf 1 oz coins dated 2014 and onwards and Silver Maple Leaf 1 oz coins dated 2015 and onwards. If you’re interested in buying these types of assets, look for a registered Bullion DNA dealer.
- Premiums and commissions. Read the fine print to find out what fees the dealer charges. Expect to pay a commission to the dealer, which is usually folded into the purchase price, as well as an assay fee to check the purity of the gold and to verify its authenticity, but shop around for the best value.
- Compare price to Canadian gold price. Gold prices are commonly quoted in US dollars, so make sure you compare the price offered by a dealer with the current price of gold in Canadian dollars.
- Delivery. Find out how and when the gold will be transported to you or to its place of storage. Is it insured if anything goes wrong during the delivery process?
Thinking of buying physical gold? Consider the pros and cons first
- Protect your wealth. Gold has long been seen as a reliable store of value that is largely unaffected by the factors that influence other investments. For example, when share prices plummet, the price of gold usually rises as investors look for somewhere “safe” to park their money.
- Diversify your portfolio. Gold’s “safe haven” status also makes it well worth considering if you’re looking to diversify your investment portfolio and protect your overall financial position during periods of market downturn.
- Easy to buy. There are many dealers who specialize in buying and selling gold, so getting your hands on this precious metal may be easier than you think.
- Tangible asset. If global financial systems were to somehow collapse, such as what happened during the Great Depression, owning gold as a physical asset offers financial protection. Gold also can’t be destroyed by fire or water damage and won’t corrode over time.
- Liquid. Gold is fairly easy to convert to cash whenever you need to do so. However, it can be easier to sell a gold stock or ETF than it is to sell a bar of gold.
- Long-term returns may be lower. Gold is commonly seen as a steady investment, so it may not offer the same potential for big returns as other investments.
- Other fees to consider. You’ll need to factor additional costs such as dealer fees, delivery, storage, security and insurance into your calculations.
- Not as convenient as ETFs. ETFs offer a simple and cost-effective way to gain exposure to gold and may be a more convenient option than buying physical gold for many people.
- No ongoing income. Unlike owning property or shares, which can both provide an ongoing source of income in the form of rent and dividends respectively, gold doesn’t provide regular income.
Bottom line on investing in gold
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 in Canada, remember that, like all investments, it carries risk.
How to buy gold in Canada FAQs
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