Are you looking to buy gold in Canada?
Do you want to invest in gold and build a smart portfolio that will yield long-term profits?
Are you sold on the idea of owning precious metals and unsure how to get your hands on them?
This guide will walk you through the processes involved in purchasing gold in Canada.
Gold has been legal tender and a store of value for centuries. When you buy gold, you are buying one of the most stable assets in the world.
Due to several individual preferences, gold can be acquired in different ways:
Gold coins or gold bars
The most logical way to own physical gold is to acquire bullion, which is sold in the form of coins or bars.
Gold bars can be purchased in pieces from local gold dealers, government, private companies and even online stores at the spot price, which is the price of pure gold plus additional expenses.
Gold bars come in various sizes ranging from 1/10 ounce to 1 kg, but there are bars up to 500 ounces.
Although buying physical gold in Canada is relatively easy, let’s take a look at some important details to consider before acquiring your gold:
1. Storage
Owning gold bars gives a different feeling. You may want to get a safe to store your metals, which will increase your overall costs.
However, be aware that home insurance will not cover your losses in the event of theft or other damage.
The second option available is to store them in bank vaults if you trust banks.
2. Scams
Doing a lot of research is essential to finding a reputable gold dealer.
When buying gold from an online store, it is important to look at the seller’s reviews. And avoid buying from sellers with a history of proven negative feedback, such as exorbitant shipping costs and high dissatisfaction rates.
3. Pure gold
When purchasing a gold bar as an investment, you should only purchase a bar that has a stamped face; its purity which must be 99.9%, its manufacturer and its weight.
The lowest quality of an investment grade gold bar should be 95.5%.
Gold coins in Canada come in different forms.
There is the government-issued coin manufactured by the Royal Canadian Mint (RCM), called the Maple Leaf gold coin, which is the country’s official bullion coin.
The bullion coin is 24-karat gold with 99% purity. It shares similarities with the American, Kugger and South African Golden Eagle, and with the Chinese Panda coin.
Coins vary in value and size, from one ounce of gold to 1/20 ounce, and are valued based on the price of gold locally.
How to buy gold in Canada?
The Royal Canadian Mint (RCM) is the primary supplier of bullion coins and these are purchased by private and public institutions, either through dealers or distribution banks.
Typically, these products trade at a price that incorporates a premium over the market spot price.
The RCM is the source of production for all Canadian coins in circulation.
The Canadian Mint sometimes produces coins for other countries, and its product line includes precious metals and other jewelry.
Gold can also be purchased online by frequenting several online stores. Let’s take a look at some stores and how they work.
To buy gold bars at auction from eBay sellers, all you need is an eBay account and a Paypal transaction account. eBay rules do not allow sellers to request another type of payment.
Buyers generally do not have possession of the gold they purchase from Goldmoney. Instead, the gold is stored in a secure location by the company.
When a purchase is made, a permanent title is received in the buyer’s name and whenever they are ready to sell, the current value of the gold will be returned in cash.
Silvergoldbull sells all kinds of precious metals, jewelry, collectibles and accessories.
All a buyer needs to do is place an order, and it will be delivered to your doorstep after undergoing various custody logistics to certify its authenticity.
You can also buy gold with Bitcoin.
Silvergoldbull is quite 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 the form of bars and coins by Kitco.
They also provide a secure storage location for your metals. Basically, buyers have two options when dealing with Kitco and both options are well secured.
Kitco offers one of the lowest premiums in the business compared to other private traders.
There are several other reputable online retail gold stores like; Silver Sprott, Royal assets, SWP Caymanetc.
Gold Stocks and ETFs
Gold stock mining is simply 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 struggle to purchase, secure and insure your gold.
But like any other stock, it carries its usual risks such as market volatility, business failure and investment loss.
All you need to get started is to have a full-service broker or obtain the services of many online trading companies.
Let’s take a look at some reliable e-commerce stores;
When it comes to Franco Nevada, the most attractive thing about the company is that it has no debt.
Franco Nevada is as reliable as it gets. It is one of the few gold companies that has rewarded investors despite a long bear market.
The company’s stock price has returned an average of about 19% over the past five years, outpacing the S&P/TSX World Gold Index’s average gain of 8.5%.
Kirkland Lake Gold is a growing gold producer operating in Canada and Australia. It is currently one of the few mining companies to increase its dividend.
KLG announced a dividend in March 2017, and its value has tripled over time, jumping 500%.
The company is a low-cost producer and continues to post record quarterly results every quarter.
Kirkland continues to grow. They have increased their production over the last three years by a CAGR of 33%, their cash flow, profits and revenue by more than 20%.
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 strong financial performance and low-cost production growth.
It trades at just 1.1 times book value, projecting a net asset value of 0.82 times 22 times forward earnings.
Alamos is expected to grow earnings by 44% in 2020 and 78% in 2021, among the highest growth rates in the industry, making its value more impressive.
Agnico is a gold mining company in Canada that has been manufacturing precious metals since the 1950s. It wants to increase production by 24% through 2022, which will lead to increased cash flow.
One of the most impressive aspects of the company is its growth plans, as it hopes to achieve this improvement with the assets it currently owns.
Additionally, due to high cash flow, they aim to achieve a self-financing model with no external financing required.
Investing in gold is a smart way to diversify your portfolio. However, understand that like any other investment, it carries its own risks.
Risks of buying gold
1. Additional costs
Never underestimate the importance of doing thorough research on factors such as storage and security costs, dealer fees, delivery and insurance.
Sometimes an analysis fee to check the purity of the gold and verify its authenticity.
2. Returns may be low
Gold is considered a stable investment.
So it may not generate big returns like other investments. Additionally, it does not provide a regular source of income.
3. Red flags
While buying gold is generally a reasonable investment strategy. There are important details to note.
Avoid resellers with no known location, free storage facilities offer online resellers massive discounts, and any other complicated scenarios that could increase the likelihood of taking advantage.
Conclusion
Gold provides financial protection and is easy to liquidate when needed. Whether you buy shares in a gold-themed ETF or invest in bars or coins, it helps secure your overall financial situation during market downturns.
For example, when stock prices fall, the price of gold normally rises, as investors look for a “safe” place to park their money.
However, the main difference between sources is usually the amount of premium you pay over the spot price of gold in the market, depending on your source.
The most important thing is to do your research because it can make the difference in getting a good deal when buying gold.
Thanks for reading! Let me know your thoughts and comments below.
