An Introduction to How to Buy Physical Gold in Canada

September 11, 2019

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Do You Know How to Buy Physical Gold in Canada? What About Silver?

Learning how to buy physical gold in Canada, and even silver can save you money and time in building a smart portfolio.

Sold on the idea of purchasing gold in Canada? Unsure about the best process for getting your hands on some? This article will help you understand how to buy physical gold in Canada. First, there are a few options for buying gold generally that could be suitable for you. Below, I will walk through the best methods of how to buy physical gold in Canada.

The best choice for you may not be the same as for me because of our unique financial objectives and individual lifestyle choices. While just about nobody will complain about getting gold as a gift, preferences for the style vary. Second, among the various ways of buying physical gold, some are generally more cost-effective in certain time frames. I will explain why owing fine (99.9%+) gold bullion—go here for a quick breakdown of what is bullion—for instance, is generally preferable compared to semi-fine (less than 99.9%) gold.

What Options Exist to Buy Gold in Canada?

For a more detailed review of the different options, you might want to read about how to buy gold in Canada, generally. I like to break down gold investing into three simple schools. They are investing in:

  1. the real thing (bullion - coins/bars);
  2. something that owns the real thing (ETF - exchange-traded fund);
  3. or something that is affected by the real thing (buying stock in gold-producing companies).

Of these different schools of thought, I am a firm believer in "1. Invest in the real thing," and here's why. There are two and a half ways to invest directly in real gold. You can do so by buying physical gold, you can buy a contract valued in gold, and finally you can by a part ownership in something that owns real gold. In the first case, you can invest in bullion or non-fine gold. The second way is to buy a contract such as a contract for the future purchase of gold at a certain price. Finally, you can buy into a fund that owns precious metals, although that's really more of "2. Invest in something that owns the real thing."

ETFs are funds that are managed by gold experts, so you stand a better chance of making money than you would on your own. The price of gold will always affect gold ETFs. After all, ETFs don't actually own physical gold. They just trade in a gold index such as the CBOE Gold Index, for example. The stock price of gold-producing companies is based on the company's individual performance, rather than the performance of gold as a commodity.

Why am I focusing on how to buy physical gold in Canada? As a firm believer in precious metals as a hedge, physical gold has a few advantages including (but not limited to) the following. These begin with that fact that you hold it and there are no intermediaries to ownership. Second, physical gold can be sold to almost anyone, anywhere. That doubles when it is fine bullion that comes from an LBMA certified refinery. Finally, physical gold is much more privacy-respecting than any of the other options available. 

What Are The Basic Steps To Buy Physical Gold in Canada?

Simply put, you walk into the gold store and pay for it. Well, it's not that easy. Let me break down that first sentence for you. First, "walk into" could mean either that you find a local gold dealer or more commonly that you buy gold online. Second, "the gold store" could be a precious metals dealer, a bank, or even a jeweller. Third, "pay for it" could mean anything from cash to a wire transfer. A whole load of factors are going to determine that for you, from your location to the amount you buy.

In reality, the first step to buying gold is finding a reliable supplier. You need to find a company that offers competitive and reasonable prices, excellent customer service, and safe delivery (or potentially reliable storage services). There are many companies with an excellent reputation in Canada, and you also have the opportunity to buy elsewhere. I have never seen a bank beat anyone's prices and quite frankly the selection and wait times are awful. In fact, I have purchased bank-branded precious metals cheaper from dealers than at the banks themselves.

Most suppliers sell their gold both in-store and online. Global Bullion's model is to sell both gold and silver with a focus high customer satisfaction rates, and prices that are rarely beat across North America. In addition to buying online through a dealer's website, you can find some leading dealers on eBay.

After finding your dealer and before purchasing your gold, you have to decide what form of gold you would like, such as either gold coins or bars. You will also need to decide what Mint's, e.g. the Royal Canadian Mint, or Refiner's, e.g. Republic Metals Corp., product you prefer. Just remember to stay away from buying post-office coins for your own financial sanity.

A Primer on Different Types of Gold

There are various advantages to buying coins over bars, and vice-versa. You will need to educate yourself on the best options available. There is no real right or wrong answer on which you buy. It just depends on what you really prefer.

As with any investment, there are several factors to take into consideration such as the value of your investment, the product premiums, how long you plan on keeping it and where you plan on storing it. Coins are typically slightly more expensive than gold bars, but they are easier to store. Many investors appreciate their beauty and scarcity more than they do for gold bars. As such, you may find them easier to sell at a high price.

The American Eagle gold bullion coins and Canadian Maple Leaf bullion coins are the most commonly-traded so it will be easy to sell these when the time comes to do so. However, Canadians beware: American gold eagles are not fine (99.9%) gold bullion. Rather they are made of 22K (99.17%) gold. As such, they are not considered investment products and are subject to Canadian sales taxes.

What's more, the 0.9999 Canadian Maple Leaf is arguably the most recognized bullion of all, so this could be another consideration.

These are typically offered as 1oz coins, and you can buy as many as you desire. You will need to decide whether you will store the gold yourself or pay for it to be stored in a vault. Traditional vaulting services can be pricey, but you may be able to find a more affordable alternative, such as an in-home safe or bank. 

Premiums

A premium is an additional cost charged above the gold spot price. Reputable bullion dealers charge investors small percentage premiums. The most effective way to avoid paying premiums is to buy gold bars as opposed to coins. This is due to the larger unit size because it cost less to manufacture. It cost the same amount to buy a 1 kilo bar as to buy 10 100g gold bars for the exact same reason. As a tip, if you plan on keeping your gold for a long time, then larger gold bars are advisable.

In addition, consider whether you want to buy insurance on your investment. This is typically recommended when storing your precious metals at home.

With this information at hand, you can buy whatever gold bullion you are most comfortable owning. Diversification is as important in this market as it is in any other form of investment. Consider mixing and matching different options.

By researching several different dealers, you will be able to get a solid idea of the options available to you.



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