When you first enter the market for gold, the sheer number of options available to you can feel overwhelming. You can buy the metal in the form of coins, bars, and rounds, all of which have their own pros and cons that will appeal to investors with different priorities. There are also various sizes, weights, and measurements in which you can buy it, not to mention different options when it comes to purity.
From the most commonly-recognized coins around the world to rarer ways to own physical bullion, this guide will help you buy gold in Canada and find the right product to fit your investment needs.
Gold Coins
Coins are among the best options for investors and collectors. They are the most easily recognized products from sovereign mints. Coins are preferred for their liquidity, meaning it takes little time or effort to convert the asset back into currency. You won’t have to try very hard to find a buyer.
The most well-known mints are located in Canada, the US, the UK, South Africa, Austria, and Australia. Investors are advised to avoid less-recognized sovereign mints simply because name recognition and trust make it easier to sell a product. Some smaller countries even outsource to better-known national mints and are effectively only responsible for their design. That can be great for a collector interested in unique finds, but for an investor, recognizability and trust are better qualities to have.
22 Karat Coins
When you’re shopping for coins, there are a few things you should know about the options available. Bullion coins are .999 (99.9%) pure gold or higher, meaning there is very little in the way of impurities. This makes them 24 karat and a tax-free investment vehicle in Canada. When it comes to 1 oz American Gold Eagles, they are 22 karats, or .9167 (91.67%) pure. Nevertheless, they still contain one ounce of gold; the coin is simply heavier than most other 1 oz gold coins in the world. Most notably, taxes must be charged on these products in Canada – making them a less attractive investment.
Another 22k gold coin is the South African Gold Krugerrand, the most popular coin of the 1970s and ‘80s bull market and one of the first options everyday investors had for purchasing bullion themselves. First produced in 1967, it would become synonymous with bullion and was especially popular in the US, which would not begin minting its own bullion coins until 1986. It was the first among a series of coins that would follow, including Canada’s “Maple Leaf” in 1979 and China’s 1 oz gold “Panda” in 1982.
When you are selling gold in Toronto, if you have a 1 ounce gold coin, it will be easy to find a buyer, especially if you purchased internationally-recognized coins such as Canadian Maple Leafs, , Austrian Philharmonics, British Britannia or any other world-recognized coins.
1 Oz Gold Coins
The Canadian Gold Maple Leaf is a favourite among international investors and will have the readiest market. The Maple Leaf is among the world’s purest bullion coins at .9999 gold. It’s one of the most popular coins worldwide and even prompted the US Mint to create the 24-karat Buffalo in 2006.
In 2013, the Royal Canadian Mint added new security features that make it easier for investors to authenticate the coin. They added a laser-mark micro-engraving of a second maple leaf and Bullion DNA technology that allows buyers to instantly authenticate the coin. It’s some of the most powerful anti-counterfeiting technology available right now, and it’s cemented the Maple Leaf as a global standard. Fortunately, when you visit gold dealers in Toronto, the Maple Leaf should be one of the most common coins available.
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Commemorative Coins
Collectors looking for more than just bullion value may turn to rarer, harder-to-find older coins or commemorative coins. One of the joys of becoming a collector is appreciating the many unique designs offered to celebrate historical occasions, cultural events, national flora and fauna, and more. There are always new series being issued with limited mintages. Keep in mind that new and recent commemorative coins nevertheless tend to be available enough that they don’t have any real numismatic value, and holding onto them for years is still no guarantee that they will gain any. That said, collectors who prize a diverse and interesting collection will find plenty of beautiful options.
Collectors looking for the unusual can also turn to pre-owned coins. Often gold dealers will offer their-choice selections of coins, bars, and rounds at a lower premium. Type and condition may vary widely, but it’s a cost-effective way to get .999 fine gold, and you can always be surprised by what you get.
Fractional Gold Coins
Finally, many mints now also offer different sizes of coins. Originally, one ounce of gold was the standard unit you would have to buy to get your hands on bullion, but today’s options give you a lot more flexibility. You can now find coins available in 1/10 oz, 1/4 oz, and 1/2 oz sizes.
Fractional sizes make bullion more widely available to beginner and everyday investors. For beginners, it can be difficult to justify spending the entire 1 oz gold price. Smaller quantities will come at a significantly higher cost-per-ounce (or premium), but the smaller spend makes bullion accessible to a wider range of investors and more accessible.
The cost factor is one of the reasons investors may ask whether they should buy gold or silver. The lower price of silver means it has a lower barrier of entry – which means you can buy in larger quantities and save on premiums. However, note that silver premiums are generally significantly higher than gold premiums. It makes sense if you’re getting into bullion on a budget, but you should know that silver prices are influenced by different market forces and don’t always follow other precious metals.
Gold Bars
One of the keys to successfully investing in precious metals is reducing your premiums. Premiums are a small portion of the cost charged by mints and reputable dealers to cover the costs of creating, shipping, storing, and insuring the products before it gets to you.
Buying bars is one of the most effective ways to reduce your premiums. Bars are less expensive to manufacture than coins, which include unique designs and sometimes security measures that allow holders to guarantee their authenticity down the road. They’re also easier to stack and store in large quantities. Large buyers tend to be less concerned about the condition of high-purity bullion and may go for cast over minted bars to reduce their total costs.
The other way to minimize premiums is to buy a larger weight all at once or in a single product. The lower costs of manufacturing help stretch your budget. One ounce gold bars are among the most common products available. Whereas coins can only be produced by national mints and are technically legal tender in the countries where they are produced, private refiners can also produce bars. Some of the names you can expect to find in this category include PAMP Suisse, Credit Suisse, and Valcambi, but you can also find them produced by the Royal Canadian Mint. In addition to one ounce weights, you can also find products such as a 5 oz gold bar or 10 oz gold bar.
A 1 kg gold bar is a good option for anyone who plans on holding onto their bullion for an extended period of time and if you are planning on making a larger purchase in any case. The 1 kg gold bar price will be the lowest premium item to purchase.
The disadvantage of a large bar comes when you’re ready to sell. Since there are a subset of customers who are looking for a 32.15 troy oz gold bar (1kg) – you may be offered a lower percentage of spot at the time of sale, compared to 32 pieces of 1 oz gold bars, for example. A large, heavier bar can’t be broken up, which is something you might want to do if the price of gold skyrockets and you decide you want to realize some of those gains without selling off your entire position. Rebalancing your portfolio is something you should do with some regularity, and it can help you invest in under-priced assets using the proceeds of assets that have been doing well.
When you have a 1 kg gold bar, you have to sell the entire thing. If you purchased smaller quantities, it will be easier to hold on to some of your commodity and still cash in on some of the proceeds. However, there are also 1 gram gold bars and 1 oz gold bars that come with lower premiums and are easier to sell.
Gram Gold
Another measurement you’ll find is by the gram. Some of the more common weights you can find include:
- 1 gram gold bars (0.03215 troy oz)
- 5 gram gold bars (0.16075 troy oz)
- 10 gram gold bars (0.3215 troy oz)
- 25 gram gold sheet bars (0.8037 troy oz)
- 50 gram gold bars (1.6075 troy oz)
- 100 gram gold bars (3.215 troy oz)
When it comes to larger bars, European refiners offer them in a variety of weights that allow you to vary how much bullion you buy at a time. For the sake of comparison, there are about 31.1 grams in a troy ounce.
Smaller quantities can make bullion more accessible for all kinds of investors. Unique products like sheets of 1 gram bars are designed for flexibility and tradability. You can part with fractions of your investment rather than having to commit to exchanging the entire thing. Keep in mind, the smaller (weight and size) the product, the higher the premium (due to higher manufacturing costs).
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Understanding Karats and Purity
There are several measurements that refer to the purity of gold and that have just as much impact on the price as the total weight of your item. The price of 18k gold will be lower than 24k if both items share the same weight. The former item is alloyed with more silver, copper, or other, usually less-valuable metals. An XRF machine (X-ray fluorescence) can tell you the exact metal composition of an item, but most precious metal items will have their purity printed on the object.
The two measurements you’re most likely to encounter are karat and millesimal fineness. Karat is a fractional measure out of 24, while millesimal fineness is parts per thousand. For example, you’ve likely heard of 24 karat gold. Using millesimal fineness, that same product would be 999 (or .999) gold. Both items are 99.9% pure, with only minor impurities of other metals.
Here’s how both measurements compare:
|
Karats |
Millesimal Fineness |
Purity (%) |
|
9K |
375 |
37.5 |
|
10K |
417 |
41.7 |
|
12K |
500 |
50 |
|
14K |
583 |
58.3 |
|
18K |
750 |
75 |
|
22K |
917 |
91.7 |
|
24K |
999 |
99.9 |
Some products may have even higher purities. For example, a Canadian Maple Leaf is 999.9 parts gold per thousand (also commonly seen as .9999 or “four nines fine”). While this does not translate to a higher number of karats, it means that there are fewer impurities found in the item. The purest gold ever minted was a six nines fine proof plate by Australia’s Perth Mint.
How Much Gold Should You Buy?
The optimal purchase depends on your goals. Are you an investor trying to diversify your portfolio? How much do you already have saved? Are you a collector looking for interesting coins?
For investors, gold serves well as an inflation hedge, especially in a market where interest rates are very low, and bonds are not producing very much. It’s also a safe haven, with prices often benefiting from uncertainty on the stock market. It fills a valuable role in many portfolios, and owning some gold is a good idea for many investors. How much you should buy really depends on your total savings.
By some estimates, about 5 to 10% of your portfolio could be in gold. That’s enough to benefit when gold prices rise due to uncertainty on the market when stocks are going down and investors scramble to find alternative homes for their money. After an upset like that, an investor can rebalance their portfolio, selling some bullion and reinvesting in other financial products when their prices are down.
Some prefer to own a higher proportion of the precious metal because of its enduring value and to protect against crises and inflation. Many want to make sure they have something valuable to leave to the next generation that will always be worth something.
For many, the type, size, and volume of gold they purchase is a matter of personal taste. If you’re new to bullion and not sure where to start, book a free bullion consultation. Every client has different needs and has different knowledge when it comes to bullion, so getting insight from an industry expert is always a good place to start.