Why and How (not) to Buy Gold in Canada from Banks

Talking How to Buy Gold in Canada from Banks:

Precious metals buyers in Canada are often faced with the complex question of how to buy gold in Canada from banks. Before answering how to buy gold in Canada from banks, we should probably say that YES - it is possible to do so. With that in mind, should you? And really, how can you buy gold in Canada from banks without overpaying?

An Introduction to how to buy gold in Canada from banks.

Gold and other precious metals are typically seen as one of the most reliable long-term investments and stores of wealth. Well, how do you buy gold? If your first answer is a jeweller and your second answer is the bank, you would be the average answer. Arguably as it may sound to a seasoned gold or silver investor, finding a reliable precious metals dealer can be tricky. That's especially the case because of rumours of fake gold bars at major banks.

What about the internet? There are just as many bullion dealers online as there are Twitter feeds about gold news. While many investors find reliable and established online bullion dealers, others struggle with buying online. This is especially true if you are not fully informed on how gold prices work, what kind of customer service comes with, and what safe delivery and/or storage options exist.

For investors who want to go local, there are normally three options. The first is to find a local bullion dealer. This is a safe and cost-effective method to buy precious metals. The second is to find a local jeweller who happens to carry bullion. This is what many people naturally do, and frankly what many more do because there is no local bullion dealer. Finally, some investors go to buy physical bullion at the bank. Generally, this offers added psychological comfort, at the cost of a much high premium over the spot price of the metal.

For those interested in doing so, read on.

How to buy gold in Canada from banks if you don't know which ones sell it.

How do you buy gold in Canada from banks if you don't know whether your branch carries any? The obvious answer is "with great difficulty". While there are many banks in Canada that will let you buy gold from them, and nearly all provide a storage solution, most branches seldom stock any precious metals for retail sale. Outside of being a security risk, it ties up capital that could be used elsewhere. Most importantly, there are only a few of us out there willing to pay 2-3x as much of a premium just to buy from a bank branch.

Learning how to buy gold in Canada from banks is therefore really about how to get it from your branch with as little hassle as possible. By hassle, I am referring to both time and money. That is to say, your bank branch may be able to get you gold if you pay a little more, but it will take at least some time for that metal to ship over to you or the branch.

So what you need is to find a bank that will offer you the most competitive deal. Google Maps, which is a great tool to help you find all the gold dealers in the region, can be a great tool to help you buy from banks. Simply type 'gold dealers' into the tool and all the alternatives in your local area will pop up. Now, you are probably thinking that I am crazy for telling you to Google your local branch. Rest assured, I am not.

First of all, once all the alternatives pop up, browse them to see what banks in the are have advertised gold-selling services. If there are several banks to choose from, you can compare the rates on offer via each bank's website. Have a look at each rate that each bank in your local area will charge and decide which bank is the best option for you based on that. Second, if this proves to be no help, you should search for which banks have the best deals on gold.

Buying Gold from a Bank: Things to Bear in Mind

Although some banks will let you buy up to 1 oz gold coins, others may only invest in large gold bars up to 400 ounces. You'll pay less of a premium above spot price with these larger gold bars because it cost less to produce a huge gold bar. However, there are advantages of buying coins over bars that you want to consider.

For example, those buying coins will have a greater pool of customers to sell to, and therefore be more likely to get a favourable price once you are ready to sell. There are fewer potential buyers for large gold bars, as there won't be as many investors with the capital to spend on them, so it might be tougher to get the price you're after.

Something to keep in mind when contemplating buying gold from a bank is the lack of advice provided by the individuals selling you gold. Bullion suppliers who specialize in the field specifically will be able to give a more in-depth analysis and appropriate guidance in purchasing/investing into gold. 

For example, at Global Bullion, we generally recommend to never buy Gold Bullion in smaller pieces than 1 oz. Once you start looking at fractional gold products (such as the 1/10th oz, 1/4 oz and 1/2 oz gold, or smaller gram products) - the overall price per oz or price per gram begins to sky rocket. And if you are buying a brand new product as opposed to a pre owned one - the premium will be even higher!

Storing you Gold at a Bank

Most banks will provide a storage service for your gold. Many people argue that this will be a lot more secure than storing it in your house, which could be subject to a burglary.

However, you will have to pay annual storage fees to the bank, potentially erasing any capital gains you benefit from with your gold. Moreover, your gold will be subject to immediate disclosure if the bank is requested—not even required—to do so by a tax authority.

Does Storing Gold at Home Make More Sense?

If you want a reasonably secure spot to store your gold, consider buying a home safe. You can expect to pay around a couple hundred dollars for a high-quality one, which is what you might expect to pay the bank for just a year of storage fees.

That is to say, if your local branch even has a spot. Depending on your insurance policy, you may need to declare this metal to have it protected. You can read more about all this in our article on some creative ways to hide gold and silver.

Another alternative is to work with a secured storage third party directly or through a fiduciary of sorts. In the former case, you could sign up with a Brinks or Malca-Amit to store your precious metals. In the latter case, for instance Global Bullion, offers secure and efficient vaulting services with tailored benifits. Moreover, you can retain added privacy over your gold holdings by keeping them at vaults such as SWP Cayman.

Whether you store metal at the bank, at home, or at a vault, think about convenience in getting that gold or silver back in your hands without Uncle Sam getting involved. Unlike the bank,a secured third party won't just let go of your privacy on a whim.

If You're Asking an Insider's Opinion on How to Buy Gold in Canada From Banks...

With the right combination of a trustworthy source and a strategy in mind, you can protect your wealth for generations. If you want my opinion, buying from a bank is just about the least cost-effective way you can do it. Yes, you can purchase gold from a bank.

However, seasoned bullion dealers will provide a systematic and headache free service to both sell and store your gold. Whereas the banks focus on a variety of financial services, a dealer specializes in the niche market of precious physical metals. Whether you hold for the long-term like me or are a trader, the spreads over the market value of the metal are so much lowered its not even a question.