With stocks being as volatile as they have been over the recent economic instability, investing in gold can bring more stability to your investment portfolio. The precious metal has long been a valuable asset to help hedge against fluctuations in the market, which is why it remains a staple in the world of sound investing.
If you’re thinking about investing in gold, what type of gold should you buy, and where can you buy it? Read on to learn about how to invest in gold in Canada.
Ways To Invest In Gold In Canada?
There are plenty of ways to invest in gold, depending on your capital, appetite for risk, and goals. The following are some ways to buy gold in Canada.
Gold Bullion
Gold bullion refers to physical gold in the form of bars and coins that come in a variety of sizes and weights. Bars range in weight from 1 gram to 400 ounces, while gold coins usually range in weight from 1/20 ounce and 1 ounce, though heavier weights may be available. Gold coins are usually cheaper per unit weight to buy and are easier to sell and liquidate.
Where Can You Buy Gold Bullion?
Investors can purchase physical gold bullion from banks and gold dealers. If you’re purchasing from a dealer, it’s important to make sure the vendor has a good reputation and adheres to government regulations.
Where Can You Store Your Gold Bullion?
Since gold bullion comes in physical form, it must be stored somewhere securely. While you can store gold somewhere in your home or elsewhere, you can also have it stored in a secure vault or safety deposit box for a fee.
Gold Stocks And Gold ETFs
Like other stocks, gold stocks are a popular investment and represent fractional ownership of equity in a gold mining company. Gold mining company stock prices typically follow the price of gold, but they are ultimately based on the company’s bottom line. With gold stocks, it usually comes with dividend payouts and you don’t actually own any physical gold. As such, investing in gold stocks comes with the same type of risks and fluctuations as with other regular stocks.
Gold Exchange-Traded Funds (ETFs)
Gold ETFs are funds that are traded like stocks and are made up of assets backed by gold. But instead of investors owning the physical commodity, they own small amounts of gold-related assets. This type of gold investment product provides investors with exposure to gold with much smaller capital compared to investing in gold futures or gold bullion.
Like gold stocks, gold ETFs track the price movements of gold or stocks with gold exposure.
Where Can You Buy Gold Stocks And Gold ETFs?
You can buy gold stocks through a stock brokerage like Wealthsimple, interactive brokers, Questrade and other investing platforms.
Gold Futures
Gold futures are exchange-traded contracts between buyers and sellers that are traded on stock exchanges. With these contracts, the buyer agrees to buy a certain amount of gold at an agreed-upon price on a future date, no matter what the market conditions are.
Investing in gold futures is the riskiest way to trade the precious metal because of the level of speculation involved when purchasing the contract.
How To Buy Gold In Canada?
Where you buy gold depends on how you want to invest in it.
Buying Physical Gold
If you wish to buy gold bullion, there are a few resources to look at:
- Banks. Canada’s Big 5 banks sell gold, including CIBC, RBC, Scotiabank, TD, and BMO. Other banks may or may not sell physical gold. You may get a better deal on gold bullion if you’re a client. Banks also offer vaults and safety deposit boxes for safe storage.
- Precious metal dealers. There are several gold dealers across Canada that buy and sell physical gold. These organizations are required to comply with a program overseen by the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) to prevent money laundering.
- In-Person Gold Dealers – Purchasing your gold in person makes sense if you can find a reputable dealer near you.
- Online Gold Dealers – Otherwise, most dealers offer online options to purchase physical gold products.
| Available Precious Metals | Types Of Products | Location Availability | |
| Silver Gold Bull | – Gold – Silver – Diamonds | Bars and coins | – Alberta – Online |
| Canadian Coin & Currency | – Gold – Silver – Diamonds | Bars, coins, and jewelry | – Ontario – Online |
| Vaulted | – Gold | Bars | – Online |
| Uphold | – Gold – Silver – Platinum – Palladium | Bars | – Online |
Buying Gold Stocks, ETFs, And Futures
Gold stocks, Exchange-Traded Funds (ETFs), and futures don’t require physically handling gold and storing it. If you wish to buy these types of gold assets, you’ll need to purchase through a broker or online trading platform.
A couple of the more popular online brokerages include Wealthsimple Trade and Questrade. Big banks may also offer online trading platforms, including CIBC Investor’s Edge and Scotia iTRADE.
How To Invest In Gold Through CFDs
A unique way to invest in gold is through contracts for differences (CFDs), which are contracts between buyers and financial institutions whereby investors speculate on the future value of gold. Investors earn profits from price movements, regardless of whether they increase or decrease. Even if the price of gold declines, CFD investors can still earn a profit.
Keep in mind that CFDs can be very risky, so they may be best suited for more experienced traders.
Should I Buy Physical Gold?
There are several perks of buying physical gold, but there are also some drawbacks to consider.
Pros
- Hedge Against Inflation. Gold has a long history of providing a reliable way to invest in an asset of value that is not impacted by inflation or the drop in value of the dollar. In fact, when the dollar weakens, the value of gold and other precious metals tend to increase.
- Diversification. Gold is a great asset to include in your portfolio to diversify it and protect your financial position, especially during times of market uncertainty.
- Easy To Buy. You can buy physical gold from any one of Canada’s Big Five banks or from several reputable and FINTRAC-compliant dealers who specialize in buying and selling gold, including ones that you can buy from online and will ship to your door.
- Physical Asset. In the unfortunate event that financial systems collapse, having physical gold in your possession would provide you with some financial protection and an asset that can serve as a form of currency.
- Liquidity. Gold is easy to sell and convert to cash, especially gold coins.
Cons
- Lower Returns Over The Long Run. Gold is typically invested in for building wealth over time and is not usually a commodity that is traded for short-terms gains, like stocks.
- Additional Fees. There are other costs to consider in addition to purchasing the actual gold itself, such as storage fees, delivery fees, dealer fees, and insurance.
- Inconvenient. Storing gold can be a hassle. If you store it at home, you’ll need to make sure your storage space is well-hidden and secure so that it does not end up in the wrong hands. If you store off-site in a vault or safety deposit box, you’ll need to pay for this service and won’t have the gold readily accessible to you in case of an emergency.
- No Income Stream. While you may earn a profit from the increase in gold’s value, you won’t collect a steady stream of income that comes with dividend-paying gold stocks.
Investing In Gold FAQs
Do banks sell gold in Canada?
How do I sell my gold in Canada?
Is it safe to buy gold online?
Final Thoughts
Adding gold to your investment portfolio can provide you with a stable investment vehicle compared to more volatile stocks. Not only can gold increase in value over time and help you build wealth, it can also be used as a currency in times of financial disaster. But before buying gold, consider whether to buy physical gold, gold stocks and futures, or trade with CFDs, along with all the different nuances that come with each type of investment.
