February 13, 2023


How to Buy Physical Gold in Canada


Whether you are looking to add a few coins to your collection or invest in a larger amount of gold, there are a few steps you should take when considering how to buy gold in Canada -  like whether you want to purchase, store, and insure physical gold, invest in gold through the stock market, or trade CFDs. 

Not sure which one is right for you? This essential guide will help you understand the different types of gold available (physical and financial) and provides the tips, tricks, and strategies you need to make informed decisions and maximize your gold investments. Let's dive in.

Investing in physical gold: Gold bars and coins

Buying physical gold is undoubtedly one of the most secure and convenient methods of investing in gold. This option provides you with a tangible asset that minimizes potential risks commonly associated with stock market investments. You can find gold dealers in Canada online or in your local area that sell two main gold-buying options:

1. Gold Coins

Gold coins can be purchased through reputable dealers, pawnshops, and private sellers or directly from The Royal Canadian Mint, Canada Post, and the five major banks in Canada. Because gold coins are collectable, you'll likely pay a premium on top of the coin's face value. 

2. Gold Bars

Gold bars—or bullion—refers to gold that is at least 99.5% pure and is typically sold by weight, either by the gram or ounce. You can purchase gold directly from Canada's big five banks (TD, Scotiabank, BMO, Royal Bank of Canada, and CIBC) either in-person at a branch or via your online banking account. If you choose to invest in physical gold, store it in a secure location. It's also important to make sure you have insurance coverage for your gold in case of theft or loss.

With Matador, you can buy, store, sell, and redeem physical gold straight from your smartphone using our mobile application. All gold purchased from the Matador inventory is held securely at the Royal Canadian Mint in Ottawa, Ontario until it is sold or shipped directly to the buyer. Transactions are recorded securely on a blockchain ledger, meaning all of your transactions are well documented and easily trackable, providing you with peace of mind and a higher level of security for your investment.

3. Investing in financial gold: Stocks

If you don't want to handle physical gold, consider purchasing stocks in gold mining companies through Canadian online brokerages. However, it's important to keep in mind that this approach exposes you to the same market risks as any other stock investment.

There are two main types of gold-focused companies to choose from: royalty companies and mining companies.

Royalty companies, such as Franco-Nevada and Wheaton Precious Metals, provide financing to mining operations and receive a portion of the gold produced. They have fewer operating costs and typically less risk as they can finance multiple mines at once.

Mining companies—like Canada's Barrick Gold, SSR Mining, and Agnico Eagle—manage and market the gold mining process. While they have the potential for higher returns by handling all aspects of the business, their stock prices can also be influenced by a wider range of factors beyond just the value of gold.

Both types of companies offer different benefits and risks, and it's important to consider your personal investment goals and risk tolerance before making a decision.

4. Investing in financial gold: ETFs

A gold exchange-traded fund (ETF) provides exposure to the gold market as a whole, rather than to a single company. By purchasing a basket of securities in a gold ETF, you can track the performance of the gold market without having to directly own the physical metal or individual stocks. 

Generally, there are two varieties of gold-related exchange-traded funds (ETFs): those that seek to reproduce the price of gold and those that invest in mining. 

Investing in the Canadian iShares S&P/TSX Global Gold Index ETF is an option for those who wish to invest in the biggest gold mining firms in the world. For those who want to invest in gold royalty companies, the Canadian Horizons Enhanced Income Gold Producers ETF could be more appealing. Risk-takers who hope to get a higher return could choose a Canadian ETF that invests in junior mining, like the BMO Junior Gold ETF.

5. Investing in financial gold: Gold futures

Another way to invest in gold in Canada is to trade Contracts for Difference (CFDs) in the futures market. Futures contracts are agreements to buy or sell a certain amount of gold at a specific price at a future date. This type of investment provides an opportunity for traders to make a profit even in a bearish gold market, however it is best suited for experienced investors as there's more risk involved.

As with any investment, it is important to do your research and understand the risks before investing in gold futures contracts. 

The golden question: What to ask yourself before investing

1. How much risk am I willing to take?

Physical gold is generally considered a relatively low-risk investment, but the stock market and CFDs can be more volatile.

2. What are the fees and taxes associated with investing in physical gold in Canada?

Gold bars and coins that are at least 99.5% pure and classified as bullion will not be taxed. However, if you sell your bullion for a profit due to an increase in value, you will be responsible for paying capital gains tax.

3. How will I sell my gold?

If you're thinking of buying gold bullion and plan to store it in Canada, one of the most common methods of selling is to visit a bank's resale center or branch. The Matador app also lets you buy, sell, and store physical gold instantly from your smartphone.

Investing in gold in Canada: Is it right for your portfolio?

In times of economic uncertainty, gold is a stable investment that doesn't fluctuate as much as stocks and other tradable assets. For example, during the 2007-2008 bear market, the overall stock market plunged 33%. Gold fell just 2%.

If you want to safeguard your wealth, consider investing in gold

Whether you decide to buy, store and insure physical gold, invest in gold on the stock market, or use CFDs to trade gold, it's important to carefully weigh the pros and cons of each option and choose the one that aligns best with your investment goals and risk tolerance.

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