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How to Invest in Gold in Canada in 2024

how to invest in gold in canada

In 2023, gold continues to be a favoured investment alternative by Canadian investors. It’s perceived as a method to broaden investment portfolios and safeguard against inflation, particularly amid low interest rates. As an asset that doesn’t correlate with others, gold has the potential to lessen the effects of market slumps and offer steadiness in periods of economic instability.

It is important to note, however, that gold does not generate income and its price is primarily influenced by investor speculation. As a result, gold can be a volatile investment with the potential for significant fluctuations in value. Canadian investors have four main options to invest in gold: physical gold, shares of gold companies, gold ETFs, or gold futures.

Buy Physical Gold from Canadian Banks

Investing in physical gold is a popular way to invest in precious metals. In Canada, the major Canadian banks are the main bullion retailers. Gold and other precious metals are exempt from GST and HST. Here is a breakdown of how to buy physical gold from TD Bank and CIBC.

TD Bank

TD Bank offers a range of gold products that can be purchased online, in branch, or at a TD Foreign Exchange Centre. TD clients can enjoy lower prices. Shipping is free on all physical metal delivery orders of $100.00 and over. TD Secure Storage allows customers to store their gold in a secure vault facility. Customers are charged a fee of $1.25 per ounce per month and a minimum account fee of $9.95/month. All gold products stored via TD Secure Storage are fully insured based on the current market value.

Here are some of the gold products offered by TD Bank:

ProductPriceStorage
TD $10 Pure Gold – His Majesty King Charles III’s Royal Cypher$289.95-$298.65$9.95/month
TD 1 oz gold bar$2,817.90$9.95/month

CIBC

CIBC offers a range of gold products that can be purchased online. Customers will need to create an account online, pay, and wait for free delivery directly to their home. Delivery is scheduled for 5 to 7 business days but could take up to 2 to 9 weeks. Storage facilities are not available at CIBC, but Safety Deposit Boxes are available for rent at most branches. A safety deposit box at CIBC costs between $60 and $400 per year according to size. If you only own a small amount of gold, the smaller box should be enough.

Here are some of the gold products offered by CIBC:

ProductPriceStorage
CIBC 1/10 oz Maple Leaf coin$309.60N/A
CIBC 1 oz gold bar$2,844.85N/A

It is important to note that prices are subject to change.

Buy Physical Gold from the Royal Canadian Mint

Investors who prefer physical gold can purchase gold bars and coins directly from the Royal Canadian Mint through their online store. The Mint offers several gold coins ranging from one gram to one ounce, with a purity of 99.99%. The prices of their gold products range from $288.88 to $99,500.00. However, there is a daily purchase limit for these products.

Customers can browse through the Mint’s website to find gold coins within their budget. Some of the gold coins available include the 1 oz. Pure Gold Coin – 50th Anniversary of the Summit Series, priced at $4,099.95, the $10 Pure Gold Coin – His Majesty King Charles III’s Royal Cypher, priced at $289.95, and the Pure Gold Coin – Kathleen “Kit” Coleman: Pioneer Journalist, priced at $999.95.

After purchasing gold from the Royal Canadian Mint, customers can expect delivery to their home within 5 to 7 days. However, delivery times may vary depending on the availability of the product. For example, delivery of most coins in stock takes one week from the time of purchase, but it can take several weeks for new products. The Mint offers free shipping for purchases above $100.

It is important to note that the Royal Canadian Mint only provides storage services for their precious metals to business accounts.

The Challenges of Buying Physical Gold

When buying physical gold, there are two main challenges to consider. The first challenge is where to store it safely. Stashing gold at home is not recommended, as it increases the risk of theft or damage due to natural disasters. Therefore, it is advisable to rent a safe deposit box from a bank. Major Canadian banks like TD, CIBC, and RBC offer safe deposit boxes for an annual fee ranging from $50 to $500, depending on the required space.

The second challenge is reselling physical gold. Unlike selling an ETF that replicates the price of gold, reselling a 1 kg gold bar can be more complicated. To overcome this challenge, you can go to the major banks’ regional resale centres or a branch. For instance, at CIBC, you can fill out a form and present the original receipt to verify that the product is in perfect condition.

It is important to note that insuring physical gold can add to the cost of homeowners insurance. Therefore, it is essential to consider the additional expenses when buying physical gold.

In summary, buying physical gold involves challenges such as safekeeping and reselling. Renting a safe deposit box from a bank is a recommended solution for safekeeping, while reselling can be done by going to a major bank’s resale centre or branch.

How to Invest in Physical Gold… Without Taking Delivery

Investors who wish to invest in physical gold without taking delivery have two options available to them: precious metal certificates and Exchange Trading Receipts (ETRs).

Precious Metal Certificates

Precious metal certificates are issued by banks to investors as proof of ownership of gold stored by the bank. RBC and CIBC both offer certificates that can be purchased through their wealth management and investor services divisions, respectively. Investors can buy these certificates through an investment account and the bank will hold the gold on their behalf. Upon purchase, investors receive a title deed by email. Certificates may be resold at market value.

Exchange Trading Receipts (ETRs)

ETRs are title deeds that entitle investors to a certain amount of gold held by the Royal Canadian Mint, a crown corporation. ETRs guarantee investors a real portion of gold. Investors can take delivery of the gold or resell the title if they prefer cash. ETRs trade on the Toronto Stock Exchange as Royal Canadian Mint CDN Gold Reserves, with the ticker symbol MNT. Investors can purchase ETRs through an online brokerage account or an investment advisor.

Investors who prefer to invest in gold mining companies can do so through a Canadian online brokerage. Mining companies manage gold mining and marketing, and their stock prices tend to follow the price of gold. Investors should note that investing in a gold mining company is riskier than investing in gold or a royalty company, as their prices are not influenced solely by the value of gold. Mining companies can face many factors affecting their profits, in addition to the stock price of gold.

Gold Royalty Companies

Royalty companies provide financing to mining companies with the capital needed to build a mine once a deposit has been identified. Afterwards, the royalty companies collect a percentage of the gold extracted from the mines they’ve financed. Royalty companies can also buy gold from mining companies at a very favourable price. Thus, royalty companies don’t have significant operating costs. Besides, they take less risk because they don’t explore and are more diversified because they can finance multiple mines at the same time.

Toronto’s Franco-Nevada and Vancouver’s Wheaton Precious Metals are among the royalty companies that investors can consider. Franco-Nevada has the largest market capitalization of the royalty companies and provides many advantages for investors, which are reflected in their share prices.

Gold Mining Companies

Investors can also invest in gold mining companies, including Barrick Gold, Eldorado Gold Corporation, SSR Mining, Alamos Gold, and Agnico Eagle. When comparing mining companies, investors should look at dividends paid in the past, as well as traditional financial ratios like the price-to-earnings ratio, the price-to-book ratio, and the price-to-sales ratio. Investors should also consider the cost of extraction per ounce or kilogram to determine the company’s competitiveness compared to its peers, as well as to better understand the risk associated with its operations. The higher the cost of extracting a mine, the more vulnerable it is to a drop in the price of gold. If the price of gold drops below the mining company’s cost of extracting, it can face serious difficulties.

Investors who wish to invest in physical gold without taking delivery have several options available to them, including precious metal certificates, ETRs, and gold mining companies. Each option has its own advantages and risks, and investors should carefully consider their investment goals and risk tolerance before making a decision.

Investing in Gold-Focused ETFs

Investing in gold ETFs is a simple and convenient way to gain exposure to the price of gold or gold mining companies. In Canada, there are two types of gold-based exchange-traded funds (ETFs): those that attempt to replicate the price of gold and those that invest in gold mining companies.

When investing in gold ETFs that replicate the price of gold, the investor’s shares correspond to beneficial ownership in a fraction of gold held in trust in a vault. In Canada, there are three gold ETFs that replicate the price of gold: iShares Gold Bullion ETF (CGL), Sprott Physical Gold Trust (PHYS), and Purpose Gold Bullion Fund (KILO). It is essential to consider the management expense ratio (MER) when selecting a gold ETF to invest in, as gold ETFs often charge a higher MER than regular index ETFs. Additionally, investors should be aware of currency fluctuation, as some gold ETFs come in currency-hedged and unhedged versions.

The following table summarizes the three gold ETFs that replicate the price of gold available in Canada, along with their ticker and MER:

ETF nameTickerMER
iShares Gold Bullion ETFCGL0.55%
Sprott Physical Gold TrustPHYS0.41%
Purpose Gold Bullion FundKILO0.23%

Investing in gold mining companies through ETFs provides investors with exposure to the price of gold while also allowing them to profit from the companies’ operations and dividends. The Canadian iShares S&P/TSX Global Gold Index ETF invests in the largest gold mining companies globally, while BMO’s Equal Weight Global Gold Index ETF is another option. For investors interested in covered call options, the Horizons Gold Producer Equity Covered Call ETF may be more attractive. Those willing to take on more risk for higher potential returns may consider investing in junior mining companies through the BMO Junior Gold ETF.

The following table summarizes the gold mining company-focused ETFs available in Canada, along with their ticker and MER:

ETF nameTickerMER
BMO Equal Weight Global Gold Index ETFZGD0.60%
BMO Junior Gold Index ETFZJG0.61%
iShares S&P/TSX Global Gold Index ETFXGD0.61%
Horizons Gold Producer Equity Covered Call ETFGLCC0.79%
Horizons Gold Yield ETFHGY0.90%
CI First Assets Gold+ Giants Covered Call ETFCGXF0.71%

Investors should carefully consider their investment goals, risk tolerance, and investment horizon before selecting a gold-focused ETF to invest in.

Investing in Gold Futures

For experienced investors, investing in gold futures contracts can be an attractive option. This involves opening a margin account with an online broker and committing to purchasing a certain amount of gold at a predetermined price, at a future date called maturity. Maturities range from 1 to 3 months, and the typical quantity of gold is generally 100 oz. per contract. If the price of gold exceeds the price of the futures contract, the investor can sell the contracts and pocket the profit. However, it is important to note that the contracts must be sold before maturity, otherwise the investor will be required to purchase physical gold.

In addition, investors can also buy gold futures through an ETF such as Horizons Gold ETF (HUG). This ETF aims to replicate the performance of the Soloactive Gold Front Month MD Rolling Futures Index. It is important for investors to carefully consider the risks and potential rewards before investing in gold futures.

Top Online Brokers to Invest in Gold

Qtrade

Qtrade Direct Investing is a platform that offers a low-cost experience for independent investors. The platform has gained a reputation for providing fast and efficient customer service. Qtrade allows you to buy or sell 100 ETFs for free. On other transactions, there is a base commission of $8.75 per transaction. As of October 31, 2023, investors can get up to $150 cashback by using the promo code OFFER150.

Wealthsimple Trade

Wealthsimple Trade is a user-friendly app that allows investors to trade stocks and ETFs without any brokerage commissions. The platform has a very attractive fee structure, with no transaction fees, no commissions, no annual fees, and no account maintenance fees. Investors can get a $25 cash bonus and commission-free trades when they open a Wealthsimple Trade or Crypto account and deposit and trade at least $150. There is also a bonus of up to $150 waived when investors transfer $5000+ to Wealthsimple from their other brokerage or bank.

Questrade Trading

Questrade Trading is a platform that offers a more complete experience for investors interested in more than stocks and ETFs. The platform offers a minimum commission of $4.95 and a maximum of $9.95 per trade. Buying ETFs is free, and Questrade Global can be used to trade on the foreign exchange market (Forex) and on the precious metals market, from around 15 international stock exchanges. Investors can use the code “Hardbacon” to get a $50 trade commission rebate or $10,000 managed free for a year.

BMO InvestorLine

BMO InvestorLine is a platform that offers registered (TFSA, RRSP, RESP, RRIF) and non-registered accounts, all with no minimum balance. Investors can invest in stocks, ETFs, options, bonds, GICs, and mutual funds. The platform does offer 80 commission-free ETFs, but no gold ETF is part of their list.

BMO Investorline Self-Directed

BMO Investorline Self-Directed is a trading platform that offers registered (TFSA, RRSP, RESP, RRIF) and non-registered accounts, all with no minimum balance. Investors can invest in stocks, ETFs, options, bonds, GICs, and mutual funds. The platform does offer 80 commission-free ETFs, but no gold ETF is part of their list. There is a flat-fee of $9.95 per trade. Investors can also use the platform to invest in different accounts like a TFSA, RRSP, RESP, and more. They can also unlock access to some of Canada’s most popular ETFs without commission fees and take advantage of industry-leading research and real-time quotes. Investors can also take advantage of the platform’s easy-to-use analysis tools to benchmark, customize, and track their performance.

These online brokers offer investors a variety of options to invest in gold. Investors can choose the platform that best suits their needs and preferences.

The Path to Wealth is Paved in Gold

Investing in gold is a popular way to diversify a portfolio and protect against inflation. There are several ways to invest in gold in Canada. For those who want to physically own gold, purchasing gold coins or bars is a good option. Major Canadian banks offer precious metal certificates for those who don’t want to deal with the burden of physical storage. Online brokers offer investment options in gold stocks, gold-focused ETFs, or gold futures. It’s important to consider the pros and cons of each investment option and choose the one that aligns with your investment goals and risk tolerance.

FAQs about Investing in Gold in Canada

Investing in gold can be a great way to diversify your portfolio and protect your wealth against market fluctuations. Here are some frequently asked questions about how to invest in gold in Canada:

How can I invest in gold stocks in Canada?

Investors can invest in gold stocks in Canada by opening an account with an online broker like Wealthsimple Trade or QTrade, or by talking to a financial advisor about buying gold stocks or ETFs.

Is gold a good investment to protect against inflation?

While gold has a mixed record when it comes to hedging against inflation, it can be a good way to diversify your portfolio and protect your wealth against market fluctuations.

Is buying gold jewelry a good investment?

Buying gold jewelry can be a way to purchase gold, but investors should be aware that they may be paying extra for the amount of gold they are actually getting. Gold content is measured in karats, so investors should be sure to understand the karat rating of any gold jewelry they are considering purchasing.

Are Canadian gold coins a good investment?

Canadian gold coins, such as the Canadian Maple Leaf coins, can be a good investment for diversification purposes. The price of gold may be less affected by movements in other asset classes like stocks, making gold coins a good way to diversify a portfolio.

Does Warren Buffet invest in gold?

No, Warren Buffet does not invest in gold and has spoken out against it in the past. He has stated that gold does not offer a product that people need and is not procreative.

How much do you need to invest in gold?

The amount of money needed to invest in gold depends on the type of investment. Gold stocks and ETFs can be relatively cheap, while purchasing a bullion may require thousands of dollars.

How do I invest in gold bullion?

Investors can purchase gold bullion at banks like TD and CIBC, or directly from the Royal Canadian Mint. Before making a purchase, investors should consider storage and insurance options.

Are Royal Canadian Mint coins a good investment?

Royal Canadian Mint coins are a legitimate investment option and have a good reputation worldwide. Investors who are interested in purchasing gold coins should consider the Royal Canadian Mint as a potential provider.

Where can I buy gold in Calgary?

Investors can buy gold online or at gold merchants in Calgary, like Calgary Gold. Some banks and the Royal Canadian Mint also allow transactions to be made on their websites.

Where can I buy gold in Vancouver?

Investors can buy gold online or at gold merchants in Vancouver, like Chantou International. The Royal Canadian Mint and some banks also allow transactions to be made on their websites.

In conclusion, investing in gold can be a great way to diversify your portfolio and protect your wealth against market fluctuations. Investors should consider their options carefully and consult with a financial advisor before making any investment decisions.

Frequently Asked Questions

What are the Investment Options for Buying Gold in Canada?

Investors in Canada have several options when it comes to investing in gold. They can buy physical gold, gold stocks, gold ETFs, and gold mutual funds. Physical gold can be purchased in the form of gold bars, coins, and bullion from reputable dealers.

How Can I Buy Gold from a Reputable Bullion Dealer in Canada?

One of the best ways to buy gold from a reputable dealer in Canada is to purchase it from a Canadian bank. The big five banks in Canada, including Scotiabank, RBC, TD, CIBC, and BMO, offer gold bullion for purchase directly from their branches or online.

Which Canadian Banks Offer Gold Bullion for Purchase?

The major Canadian banks, including Scotiabank, RBC, TD, CIBC, and BMO, offer gold bullion for purchase. Investors can buy gold from these banks stamped with their respective symbols.

Are There Any Tax Implications for Investing in Gold in Canada?

Gold and other precious metals are exempt from GST and HST in Canada. However, investors may have to pay capital gains tax on the profits made from selling gold.

What is the Simplest Way for a Beginner to Invest in Gold in Canada?

The simplest way for a beginner to invest in gold in Canada is to buy physical gold from a reputable dealer. They can also invest in gold ETFs or gold mutual funds through a discount brokerage account.

Can I Buy Gold Bonds in Canada and If So, How?

No, there are no gold bonds available for purchase in Canada. However, investors can invest in gold ETFs or gold mutual funds through a discount brokerage account.

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