Canadians are drawn to gold because it hedges against inflation and market volatility. Gold allows you to keep your money safe and provides multiple investment options to expand your portfolio. While this asset offers more financial stability, many Canadians still don’t know how to buy Gold.
In Canada, you can either buy physical gold or invest in paper gold. Physical gold involves acquiring tangible coins, bars, or jewellery, often through reputable dealers or financial institutions.
On the other hand, paper gold, including ETFs, futures contracts, and certificates, allows investors to track gold’s price without physically owning any.
This comprehensive guide will take you through everything you need to know about how to buy gold in Canada. It will detail factors to consider and explore the different opportunities for gold investment. You’ll also learn about storage for gold, insurance coverage, and the rules set by the Canada Revenue Agency (CRA) for gold purchases.
Gold is a precious metal that has long been regarded as an asset. People invest in gold because it is perceived as a haven and a store of value. Investors utilize it frequently during periods of market volatility and widespread pessimism. However, gold does not generate income, unlike securities or real estate.
Gold is a valuable, highly speculative, and volatile reservoir of value. Its future value depends on price conjecture as opposed to earnings or dividends. Due to concerns about bank insolvency, a global recession, and stock market volatility, many analysts anticipate that gold will increase in 2023.
Furthermore, you must know the standard weights and purities to buy gold in Canada. The gram and ounce are the most commonly used units for measuring gold. Regarding purity, 24-carat gold, which is 99.9% pure, is the purest.
More Canadians than ever are considering buying gold in 2023 to hedge against economic and political instability. Gold is one of those investments that has more than one way that you can invest in it.
If you want to buy gold, you’ll have to decide whether to purchase it in physical form, buy gold stocks, or buy gold ETFs. You can also invest by trading gold in the financial markets as CDFs. Here’s a comprehensive breakdown of how to buy gold in Canada:
Buying physical gold is a sensible way to diversify your portfolio outside of the volatile stock market. Here is how to buy gold if you are in Canada. When opting for physical gold, you’ll need to navigate the following options:
For those seeking substantial investments, bullion bars present an efficient choice. These larger bars, available in various sizes, are usually priced per gram or ounce. Look for stamped indicators of purity, weight, and manufacturer on the bar’s surface.
To qualify as investment-grade bullion, bars must contain a minimum of 99.5% pure gold, exempting them from certain taxes. Conversely, bars falling short of this purity threshold remain subject to applicable taxes.
Coins, such as the Canadian Maple Leaf or American Gold Eagle, offer a more accessible entry point for investors. While they are smaller and possess inherent collector value, their convenience and versatility are key advantages. It’s important to note that coins generally carry a higher premium than the equivalent amount of gold in bar form.
Additionally, coins often have a lower gold content, like the one-ounce American Eagle coin, which contains 91.67% gold. The remaining weight is composed of silver and copper.
Antique or high-gold-content jewellery can provide an alternative avenue for gold acquisition. However, purchasing gold through jewellery may entail additional costs, as the value is influenced by craftsmanship and design.
Buyers should know that the amount of gold in a piece may not be the only thing that affects the price. The manufacturer and the complexity of the design are also factors.
There are several ways to buy gold in Canada, and here are some standard options:
Gold can be bought from any of the central banks in Canada. You can use your actual bank account, or you can buy gold bars online.
Here’s how to buy gold from the bank: Simply visit any physical branch of a major bank in Canada or use their website. Gold purchases from Canada’s main banks are subject to a daily limit, typically approximately $10,000.
If you buy more than $10,000, you’d have to visit the bank with two forms of identification. Gold purchases by non-bank customers are also subject to lower limits at some banks. For example, TD offers non-bank customers a maximum of $3,000 worth of gold within 24 hours.
Alternatively, you can buy gold from dealers like Silver Gold Bull and Sprott Money. You must open a brokerage account online to buy gold from a broker. These brokerages offer competitive gold prices, storage, gold shipping, and home delivery, among other services.
As you research how to buy gold metals, here are several factors that you have to consider:
Various avenues exist for Canadians seeking exposure to gold within their investment portfolios. Now that you know how to buy gold metals, here are some additional methods to engage in paper-based gold investments:
Buying gold stocks simply means purchasing shares in a gold mining company. With this approach, you are not investing in physical gold but in businesses related to the gold industry. There will be many gold stock options, all of which will be traded on Toronto’s TSX stock exchange.
While this approach to buying gold is easier, buying stocks carries a higher risk than keeping actual gold safe. Furthermore, you’d have to open a brokerage account to buy gold stocks. Here are a few of the best gold mining businesses to consider buying stock in to diversify your portfolio:
Mutual and exchange-traded funds (ETFs) are alternatives to investing in individual companies. Putting money into one of these allows you to purchase a grouping of already-compiled shares. Gold ETFs and mutual funds may follow the gold price, the equities of various gold mining and refining companies, or exposure to gold futures and options.
Here are some of the top exchange-traded funds (ETFs) and mutual funds (MFs) to consider investing in:
Gold futures contracts involve binding agreements to trade gold at specified future dates and prices. Contract trading is the focus, and while trading fees for futures are generally absent, some brokerages might charge per-contract trade fees. Due to its complexity, futures trading is cautioned against by novice investors, as losses can surpass initial investments.
Gold certificates serve as legal evidence of gold ownership held with financial institutions. Tradable like stocks, they offer flexibility.
Those aiming to save and invest in gold over time can consider gold savings accounts available through certain banks and financial organizations. These accounts have varying risk and reward profiles based on the chosen investment type.
Canadian investors can use retirement funds to purchase gold bullion bars and coins. Since 2005, the option of allocating funds to a Roth IRA, either a Tax-Free Savings Account (TFSA) or a Traditional IRA (RRSP), has been available. This tax-advantaged approach can be attractive for purchasing gold at favourable terms.
Here are the most common options for Canadian investors to purchase paper gold:
Research and select a reputable brokerage platform that suits your preferences and provides access to the gold investments you’re interested in. Next, create an account with your chosen brokerage and follow the required steps to verify your identity and fund your account. Explore the available gold stocks, ETFs, and funds within your chosen platform.
Once you’ve selected your desired gold investment, place an order through your trading account. Specify the number of shares you wish to purchase and set the order type (market, limit, stop-loss, etc.). After buying gold stocks, ETFs, or funds, actively monitor their performance and stay informed about market trends.
Consider spreading your investments across multiple gold-related assets to mitigate risk. Diversification helps balance potential losses and gains within your portfolio. However, this technique doesn’t involve gold ownership, exposing you to stock market dangers such as volatility, corporate insolvency, and investment losses.
When buying paper gold, there are a few factors to consider, including:
As you learn how to buy gold, you must also learn how to keep your investment safe. While gold is renowned for its stability, external factors such as theft, loss, or damage can jeopardize your investment. Insurance acts as a safety net, covering potential financial losses and providing peace of mind.
However, it is crucial to carefully select the appropriate coverage and stay informed about your policy. Here are some types of insurance coverage that can be used to insure gold.
Although there are many insurance firms, some of the most reliable insurance options in Canada include the following:
Now that you know how to buy gold, you must know what laws surround this venture. You must abide by Canadian law since you are buying gold in Canada. The Canada Revenue Agency (CRA) has set some standards regarding gold bullion. Here are a few of the more important ones:
Gold bullion must be at least 99.5% pure to be eligible for some tax exemptions, such as those available through a tax-deferred retirement account or a tax-free savings account. Gold bullion must have its purity verified by an established national mint or assay office.
If you have gold bullion in a self-directed IRA or a tax-free savings account, it must be kept with a trusted third party. This third party could be your bank or another custodian. You are entitled to a certificate attesting to the gold bullion’s authenticity and weight from the trustee or custodian.
If you sell gold bullion for more than you paid, you may have to pay capital gains tax. Whether or not you owe taxes on your gold bullion depends on your income and how long you hold onto it. If you sell gold bullion after less than a year, your profits will be taxed at your regular rate.
Gold bullion gains are subject to taxation at 50% of the individual’s marginal tax rate if held for more than a year.
The Canadian Revenue Agency (CRA) recognizes some gold bullion as “collectables.” Investing in gold bullion does not qualify as this is subject to capital gains taxation. Such gold items must be reported on your tax return if you sell them.
Gold bullion, coins, and bars can be held in retirement accounts in Canada, including RRSPs and TFSAs, according to the Canada Revenue Agency (CRA). However, some regulations must be followed. There are annual limits on the total value of assets that can be contributed to a tax-deferred retirement savings plan or tax-free savings account.
Your RRSP contribution maximum is greater than $30,780, or 18% of your earned income from the prior year. You can put up to $6,500 annually into your Tax-Free Savings Account (TFSA).
Because of the potential for changes in these values, it is recommended that you seek the advice of a tax professional to ensure full compliance with the CRA.
Concluding this article implies that you are now equipped with the necessary information on how to buy gold in Canada. However, if you decide to deal in gold, it’s vital to only transact with reputable entities. These include the banks, brokers, and insurance companies mentioned in the guide.
Also, ensure that the gold you purchase and how you purchase it align with CRA requirements. Always look out for how legit the gold is and ensure adequate preparation for storage if you buy physical gold. Lastly, don’t shy away from learning more about how to buy gold because the better you know.
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The most straightforward and cost-effective method to invest in gold is through gold ETFs and mutual funds using a Canadian discount brokerage. This approach minimizes management fees and trading costs compared to larger banks.
Gold is subject to capital gains and losses when sold, just like any other financial instrument or investment asset. Unless the transaction is made in a tax-free savings account, the asset's gain or loss in value will be subject to taxation.
Physical gold is often considered a safe investment due to its historical value and stability. However, like any investment, it comes with risks and should be part of a diversified portfolio.
Major Canadian banks offer online and telephone options to buy gold and other precious metals. These banks provide delivery and storage solutions for various preferences for storing gold bullion or coins.
Selling gold investments involves contacting your broker or financial institution, providing the necessary documentation, and initiating the sale. Capital gains taxes may apply, except when selling within a tax-free savings account (TFSA). You can sell gold with your broker if you have gold ETFs or mutual funds.
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