Are you looking to buy Gold In Canada?
Do you want to invest in gold and build a smart portfolio that’ll yield rewards in the long run?
Are you sold on the idea of owning precious metals and unsure of how to lay your hands on them?
This guide will walk you through the processes involved in buying gold in Canada.
Gold has been a legal tender and a store of value for centuries. When you buy gold, you’re purchasing one of the most stable assets in the world.
Due to several individual preferences, gold can be acquired in various ways:
Buying Gold coins or bars(bullion), which is the real thing.
Exchange-Traded Fund (ETF), buying something that owns the real thing.
Buying stock in gold producing companies, something that is affected by the real thing.
Gold Coins or Gold Bar
The most logical way of owning physical gold is by acquiring bullion, which is sold in the form of coins or bars.
Gold bars can be purchased in bits from the local gold dealers, government, private companies, and even online stores at spot price, which is the price of pure gold plus additional expenses.
Gold bars have different size ranges from 1/10ounces to 1kg, but there are bars of up to 500ounces available.
Even though buying physical gold in Canada is relatively easy, let’s take a look at a few important details to consider before acquiring your gold:
There’s a different feel that comes with owning gold bars, you might want to get a safe to store your metals, which will increase your overall costs.
However, you have to note that home insurance will not cover your loss in the advent of theft or any other form of damage.
The second available option is to store them in bank safety deposit boxes if you happen to trust banks.
Doing a lot of research is vital in finding a reputable gold dealer.
When shopping for gold in an online store, it is important to review the seller’s feedback. And avoid buying from sellers with confirmed negative feedback histories like outrageous shipping fees and a high rate of dissatisfaction.
3. Pure Gold
When purchasing a gold bar as an investment, you should only buy a bar that has stamped on its face; its purity which should be 99.9%, it’s manufacturer and weight.
The least quality of an investment quality gold bar should be 95.5%.
Gold coins in Canada come in different forms.
There’s the coin issued by the government and manufactured by the Royal Canadian Mint (RCM) called the Gold Maple Leaf coin which represents the country’s official bullion coin.
The bullion coin is a 24 karat gold of 99% purity. It shares similarities with the US gold eagle, Kugger and from South Africa, and the Chinese Panda coin.
The coins vary in values and sizes, from one full ounce of gold to 1/20 ounce and are valued according to the price of gold locally.
How To Buy Gold In Canada?
The Royal Canadian Mint (RCM) is the primary provider of bullion coins and these are purchased by both private and public institutions either via dealers and distribution banks.
Generally, these products are traded at a price that incorporates a premium with a market spot price.
RCM is the production source for every Canadian coin in circulation.
The Canadian mint sometimes produces coinage for other countries, and their product ranges comprise of precious metals and other jewelry items.
Gold can also be purchased online by patronizing several online stores. Let’s take a look at some of the stores and how they operate.
All that is needed to buy gold bullion on auction from eBay sellers is an eBay account and a PayPal account for transactions. eBay rules don’t allow sellers to ask for any other type of payment.
Buyers are not usually in possession of the gold they purchase from Goldmoney. The gold is rather stored in a secured location by the company.
When a purchase is made, a standing title is received In the buyer’s name and whenever they are ready to sell, the current value of gold will be returned in cash.
Silvergoldbull deals in all sorts of precious metals, pieces of jewelry, collectibles, and accessories.
All a buyer needs to do is to place an order, and it gets delivered to your doorstep after it has undergone different custody logistics to certify its authenticity.
You can also purchase gold with Bitcoin.
Silvergoldbull is pretty much reliable, they were the bullion dealer of the year 2018. And they have a Google seller rating of 4.9/5.
Gold is sold primarily in bullion bars and coins by Kitco.
They also provide a secured storage location for your metals. Basically, buyers are provided with two options when dealing with Kitco and both options are well secured.
Kitco has one of the lowest premiums in the enterprise when compared to other private traders.
Gold Stocks And ETF
Mining gold stocks is basically just investing in gold through the stock market by profiting from gold prices instead of physically owning gold.
With this approach, you don’t have to go through the struggle of buying, securing, and Insuring your gold.
But just like any other stock, it comes with its usual risks like market volatility, company bankruptcy, and loss of investment.
All that is required to get started is a full-service broker or obtain the services of numerous online trading companies.
Let’s take a look at a couple of reliable online trading stores;
When it comes to Franco Nevada, the most attractive thing about the company is, they are debt-free.
Franco Nevada is as reliable as it gets. They are one of the few gold companies to have rewarded investors despite a lengthy bear market.
The company’s share price has returned approximately 19% on average over the past five years, leapfrogging the 8.5% average gain of the S&P/TSX Global Gold Index.
Kirkland Lake Gold is a growing gold producer operating in Canada and Australia. It is currently one of the few mining companies growing its dividend.
KLG announced a dividend in March 2017, and the value has tripled overtime, jumping by 500%.
The company is a low-cost producer and they continue to post record quarterly results with each passing quarter.
Kirkland keeps growing. They’ve grown production over the past three years by a CAGR of 33%, cash flow, earnings, and revenue by over 20%.
3. Alamos Gold
Alamos Gold operates in Canada and Mexico, two of the safest jurisdictions in the world.
With a track record of creating value for all stakeholders through solid financial performance, low-cost production growth.
It trades at only 1.1 times book value, projecting a times net asset value of 0.82 from 22 times forward earnings.
Alamos is projected to grow earnings by 44% in 2020 and 78% in 2021, among the highest growth rates in the industry which makes its value more impressive.
Agnico is a gold mining company in Canada that has been in the business of manufacturing precious metals since the 50s. It wants to grow production by 24% through 2022 which will propel increased cash flows.
One of the most impressive aspects of the company is it’s growth plans as it expects to attain this improvement with assets they currently own.
Furthermore, due to high cash flows, they aim to achieve a self-funding model with no external financing required.
Investing in gold is a smart way to diversify your portfolio. However, understand that just like any other investment it has it’s own risks involved.
Risks of buying Gold
1. Extra Costs
Never underestimate the importance of doing thorough research on factors like costs of storage and security, dealers fee, delivery, and insurance.
Sometimes assay fee to check the purity of the gold and to verify its authenticity.
2. Returns May Be Low
Gold is seen as a stable investment.
So, it may not yield big returns like other investments. Plus it doesn’t provide a regular source of income.
3. Red Flags
While purchasing gold is generally a reasonable investment strategy. There are important details to note.
Avoid dealers without a known location, free storage facility offers online dealers offering massive discounts and every other complicated scenario that might increase the likelihood of being taken advantage of.
Gold offers financial protection, and it’s easy to liquidate should the need arises. Whether you buy units in a gold-themed ETF or invest in bars or coins, It helps to secure your overall financial position during times of market downturn.
For example, when share prices plunge, the price of gold normally rises as investors look for someplace “safe” to park their money.
However, the major difference between sources tends to be how much of a premium you pay over the market spot price of gold, depending on your source.
The most important thing is to do your research as that can be the difference in getting a good deal when buying gold.
Thanks for reading! Do let me know your thoughts and comments below.
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.