If you’re thinking about adding gold to your portfolio, and wondering where are the best places to buy gold in Canada, you are on the right post. First, we will go over the reasons why many Canadians are adding gold and silver bullion to their portfolios, and how to buy gold in a tax-advantaged and efficient way…

Why Canadians Are Buying Gold in 2024?

We live in uncertain times, and when planning for one’s financial future, there’s one thing that scares everyone about investments: risk.

Managing volatility risk is probably the most pressing concern for retirement investors, and minimizing the risk of downside losses is top of mind for those looking to retire in the near term. Fortunately, some assets are better at managing risk than others.

The golden rule of investing is: if it sounds too good to be true, it probably is. It’s easy to get caught up in today’s get-rich-quick trends, with NFTs, cryptocurrency, or even retail stock trading. Before you risk everything on an uncertain future, take a step back and consider one of the oldest, most reliable investments in history: gold.

In fact, gold has recently exploded in popularity and demand on a global scale. In late 2023, geopolitical conflicts sprung up around the world, causing widespread market uncertainty. The result? Gold prices surged to all-time highs, reaching a peak of USD 2,135 (2,897 CAD) per ounce in December 2023.

Unlike many other paper assets, gold has been around for millennia, and it’s not going away any time soon due to its myriad of industrial uses. It might just be the perfect investment for turbulent times like these.

As seen in the chart below, global gold demand is on the rise and, compared to previous years, is being increasingly driven by institutional entities such as central banks.

Source: Gold.org

As always, always speak to your financial advisor before making any investment decision, but here are five reasons why you should consider buying gold as part of a well-balanced portfolio: 

• Gold is a tangible asset with intrinsic value
• Gold is accepted and recognized worldwide
• Gold is a global currency that isn’t tied to any government or economy
• Gold is a safe haven in times of market volatility
• Gold may offer long-term stability and security as opposed to paper assets

Convinced already? Nothing this important should be decided that quickly, so let’s go back and start from the beginning. Put your prospecting hat on, because in this guide, we’re digging deep.

History of gold investment in Canada

Did you know that gold is Canada’s most valuable mined commodity? In 2020, the country had a production value of over $12 billion, the majority of it coming from Ontario and Quebec. We’re the fifth-largest global producer of gold, and recently, its use of it has changed dramatically.

For decades, gold was mainly used for jewelry purposes, but in the past few years, there’s been a shift toward gold investment. By 2020, investment had overtaken jewelry as its primary use and reached 47 percent of all usage. In mid-2022, investments comprised about half of all gold demand.

Source: World Gold Council

So, what is driving this change? There are a few factors at play here. 

• Uncertainty regarding the global economy: Central banks around the world are printing money like never before, and this has led to instability in traditional markets. Investors are starting to look for alternatives, and gold is considered a safe haven asset that doesn’t rely on any one economy.
• Technological innovation: With new ways of storing and transferring value, investors are looking for assets that aren’t as vulnerable to cybercrime or hacking. Gold is a physical asset that can’t be hacked, and it has been used as a form of currency for centuries.
• Disaster-proof: As stock markets plummeted in the wake of the 2020 pandemic and economies around the world stalled, investors turned to gold as a safeguard. In times of crisis, gold is often one of the few assets that retain (or increases) its value.

Buying gold in Canada in 2023

So, what does all of this mean for you? It means that you’re not just buying in a dip. Despite the recent price slump, gold prices have been on a steady upward trajectory for decades, and are considered one of the most stable investments someone can make. The market has taken a downturn very recently – but the thing is, this has happened before. 

Driven by the financial crisis of 2008 and several additional factors, gold prices skyrocketed in 2010 and held relatively steady until 2012. If you had made a substantial investment then, you might have been disappointed to see the value of gold drop over the next several years, assuming you had made a mistake and bought it at its highest point. 

Gold prices, monthly average 2011-2020

Source: Natural Resources Canada

A decade later, you’d be wrong, as gold surged well past the 2012 prices, representing a strong return even if you had gotten in at what appeared to be the most inopportune time. Now, as Canada may be heading toward another recession and gold prices have stabilized around relative lows, many investors are choosing to jump into the market and invest.

There are a few things you need to know before buying and selling gold, so let’s take a look at each of them in detail.

Benefits of buying gold

It’s easy to just say that gold is a safe investment, but what are the real benefits of buying it? Let’s take a closer look at some of the things it offers.

• Gold is tangible: When you buy physical gold, you’re buying an asset that has intrinsic value. That means that even if the stock market crashes, or the economy collapses, gold will still have value. It’s a reliable investment to fall back on in difficult times. 
• Gold is global: Unlike some other investments, gold isn’t tied to any one government or economy. It’s traded all over the world and is seen as a global currency. That makes it less risky and more accessible to investors in different countries. 
• Gold is a safe haven: It is often seen as a safe haven during turbulent times. During political instability or financial hardship, people often turn to gold as a way to protect their investments.
• Gold is long-term: It isn’t a short-term investment – it’s something you can hold on to for the long term. That makes it a good option for anyone looking for stability and security in their financial future.

It’s not all roses though, and it’s only fair to point out some of the potential downsides.

Disadvantages of buying gold

There are some financial strategists who don’t recommend buying gold. These are the things they usually point at as reasons to stay away:

• Gold doesn’t generate income: Some investments, such as stocks and bonds, generate dividends or interest payments that can be reinvested. Gold doesn’t offer that same security, though as we will discuss below, there are ways around this.
• It’s expensive to store securely: “Gold is bulky and heavy, so storing large quantities can be costly.” While this may have been true in the past, safe gold storage has become more affordable than ever with companies like Brinks or IDS. Also, Canadian gold companies like SilverGoldBull have special agreements in place with various gold storage companies worldwide so if you buy your gold from them, make sure you ask them about storage options. 
• Gold doesn’t pay interest. When you put cash in a savings account, you earn some interest, albeit very slim, year over year. Gold doesn’t do that.
• Gold is sometimes difficult to trade: “If you aren’t buying mainstream gold bullion coins like the American Gold Eagle or Canadian Gold Maple Leaf, it can take time and effort to find a buyer who is interested in your specific gold coins or bars. Your local gold dealer or websites like eBay can be a good place to sell those collectible gold coins you purchased a while ago.” 

N.B.: Collectible coins are sometimes referred to as numismatics or semi-numismatics. They aren’t as easy to trade as standard bullion gold coins which are recognized worldwide.

• It’s not always easy to value: The worth of gold can change rapidly, so it can be difficult to determine how much your holdings are actually worth at a specific moment. 
• Gold is a long-term investment: If you’re looking for short-term gains, buying and selling gold may not be the right move for you.

All investments come with some element of risk, and it’s important to weigh those risks against potential rewards. But when you look at the big picture, gold still comes out as a strong investment option.

How to buy gold in Canada

So how do you actually buy gold? Well, there are two broad categories that we should discuss first: paper gold investments, and physical gold investments.

Paper gold investments are essentially just investments in the gold industry. These can be mining stocks, precious metal ETFs, or even gold certificates. They’re usually very liquid (meaning you can sell them quickly without losing too much money) but the downside is that you don’t actually own the gold itself; you’re just trusting the company to hold it for you. 

Physical gold investments, on the other hand, involve buying and storing physical gold bullion bars or coins. This is more secure but also less liquid – it might take a while to find a buyer if you want to sell. However, it’s also more reliable in the sense that it’s not dependent on the stability of any company or economy.

Let’s take a closer look.

Paper Gold Investments

If you are interested in paper gold investments, there are two major topics to cover: mining stocks and ETFs.

Mining Stocks

Mining stocks are companies that mine gold and other precious metals. Like any stock, they can be affected by market forces making them at times a very volatile investment. However, over the long term, because their value is directly tied to this stable material, they have also shown to be very profitable. 

Barrick Gold (TSX: ABX) is one of the biggest gold mining companies in the world, with a market cap of over 38 billion. Remember though, when a stock falls, it can fall incredibly quickly, even if it is tied directly to something like gold. 

Precious Metal ETFs

Precious metal Exchange Traded Funds (ETFs) are a more conservative option. They invest in physical gold, silver, and other metals, but don’t actually own the bullion themselves. This makes them very liquid – you can buy and sell them on the stock market easily. 

However, because they’re not physical assets, they’re also more susceptible to market volatility.

In fact, many of the benefits associated with gold investment aren’t present in ETFs: they don’t offer the same security or stability that physical gold does.

iShares Gold Bullion ETF (TSX: CGL), is a fund that does not invest in mining but in actual gold bullion. You don’t actually own the gold, but it is about as close as you can get through this method.

Physical Gold Investments

If you want a more long-term investment opportunity and are intrigued by the benefits listed above, you might want to purchase physical gold. There are a handful of ways to do this, so let’s get into them. 

Precious Metal Dealer

You could, if you have the cash on hand, simply go to a precious metal dealer and buy gold coins or bars. This is probably the most convenient option, as you can walk in and make a purchase without any wait time. However, it’s also one of the more expensive options and not at all without risk.

Dealers usually charge a markup on the spot price (the current market price) to cover their costs and make a profit. So if the spot price of gold is $1,200 per ounce, you might end up paying $1,250 or more for a 1-ounce coin. 

Keep in mind that dealers will also offer different premiums depending on the type of gold you’re buying. For example, gold coins might be more expensive than gold bars. You also might be stuck holding the bag, for lack of a better term. Storing your gold at home can be risky if it’s stolen or lost, and insurance can be an expensive additional cost.

The best way to invest in physical gold in Canada is through a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).

RRSP

In Canada, an RRSP is one of the best places to invest your gold. This is a tax-sheltered account that allows you to save for retirement, and it comes with a number of benefits. 

One of those benefits is that you can hold physical gold bullion, as long as it is at least 99.5% pure. That means no collectible coins, most jewelry, or other manufactured items. Just investment-grade coins and bars.

Storing these inside an RRSP means that your investment will be sheltered from taxes, and it will also grow free of capital gains taxes. You can buy and sell gold bullion easily through a registered dealer, making this an ideal option for long-term investors. 

TFSA

A TFSA is another excellent choice when investing in gold. These tax-free savings accounts allow you to invest up to a certain amount per year without paying any taxes on the earnings. This is a great way to grow your money while keeping it safe from the taxman. And since gold is seen as a more stable investment than most, it’s a perfect fit for a TFSA.

Choosing between Gold in an RRSP or TFSA

Sometimes it can be challenging to understand the differences between an RRSP and TFSA or make the decision on which one is better for your investment.

RRSPs allow you to save money for retirement and receive tax breaks in return. Contributions are not tax-deductible, but all income and capital gains generated from the investment grow tax-free. Withdrawals (provided they’re for retirement) are also tax-free. 

TFSAs work a little differently. They allow you to deposit pre-tax income into the account and then withdraw it without having to pay taxes on the proceeds. This makes them an ideal option for investments that will be withdrawn before retirement or those who expect to be in a higher tax bracket later on in life.

Contribution maximums

One other thing to consider when deciding between the two is the annual contribution limit. For the 2024 tax year, your RRSP contribution limit is 18 percent of the income you reported on your tax return the previous year, up to a maximum of $31,560. 

For a TFSA, the contribution limit in 2024 is $7,000. However, unused amounts carry over from year to year. That means your limit could be much higher than $7,000 if you haven’t used it in the past.

So, which should you choose for gold investments? It depends on your personal situation. If you think you’ll be in a higher tax bracket when you retire, go with the TFSA. But if you’re looking for immediate tax breaks, the RRSP is the better option. 

In all likelihood, a combination of both would be the best way to make sure your needs are completely covered.

Best places to buy gold in Canada

Importantly, many traditional financial institutions in Canada don’t actually allow you to purchase physical gold as part of your RRSP or TFSA plans. They offer paper gold investment instead, though at least sometimes that is in the form of gold certificates, instead of stocks. 

To buy gold bars in Canada, our highest-rated dealer is Silver Gold Bull, which will purchase, store, and report your holdings to the CRA. Your gold is insured by a comprehensive plan through Lloyds of London.

It is extremely important to do detailed research before you start buying gold. This is not something that should be done without careful planning and a well-thought-out strategy. For more information on our highest-rated dealers, make sure to check out our full reviews.

Top 3 Canadian Gold Companies

If you’re ready to buy gold in Canada, we recommend these 3 Canadian gold dealers. We chose these companies because they have great ratings, and a great selection of gold and silver coins and bars that are RRSP and TFSA eligible.

SilverGoldBull

www.silvergoldbull.com
1-(877)-707-4707

Silver Gold Bull is one of the oldest and most reputable Canadian gold dealers. The company acts also as a wholesaler to smaller local dealers, and has one of the largest selection of gold coins and bars nationwide. SGB also has some of the lowest premiums for RRSP and TFSA gold buyers. 270,000+ five-star reviews. The company also supports RRSP/TFSA and a myriad of other Canadian retirement and savings accounts. They offer end-to-end white glove service for retirement investors.

For more info on Silver Gold Bull, visit the SilverGoldBull Review.

Sprott Money Ltd

www.sprottmoney.com
1-(888)-861-0775

Sprott Money Ltd. is a privately owned and operated wholesale, institutional and retail dealer of precious metals. They buy and sell gold, silver, platinum bars, coins, and wafers. Because they are a registered dealer with Questrade, you can trade gold and silver with Sprott Money in your RRSP account.

For more info on this company, visit our Sprott Money Review.

Border Gold

www.bordergold.com
1-(888)-312-2288

Another popular Canadian online gold dealer, Border Gold has one of the largest selections of gold coins and bars, although a bit less than Silver Gold Bull.

For more info on this company, read the Border Gold Review

Buying Gold in Canada FAQs