How to Invest in Gold in Canada [2024]

Summary: A valuable and sought-after precious metal for centuries, gold is a popular investment choice for individuals looking to diversify their portfolios and protect their wealth. In Canada, one of the best ways to invest in gold is through a regulated online brokerage platform, such as Interactive Brokers.

About gold

Gold is a precious metal that holds intrinsic value due to its limited supply and universal appeal. It has been used as a form of currency, a means of exchange, and a store of value throughout history. Nevertheless, its unique properties like resistance to corrosion, malleability, and electric conductivity make it indispensable in many industrial applications.

As an investment, gold is often considered a safe haven asset, particularly during economic uncertainty or inflationary pressures. Its value tends to rise when traditional financial assets, such as stocks and bonds, face downturns. Moreover, gold’s limited supply and global demand contribute to its allure as a long-term store of value.

Who can invest in gold in Canada?

Investing in gold in Canada is accessible to a broad range of individuals. There are no specific restrictions on who can invest in gold, which means anyone over the age of majority can participate in gold investment activities. Therefore, both seasoned investors and novices can have the option to include gold in their investment portfolio.

How to invest in gold in Canada: Step by step

Before we explain how to invest in gold in Canada, we should point out something. Namely, you must determine what are your investment goals. This means what’s the purpose of including gold in your portfolio—is it for wealth preservation, diversification, or potential capital gains? After you do so, you can proceed with the following steps:

Step 1: Choose the right form of gold investment

Similarly to investing in gold in the UK, Canada offers various ways to do so, with each option coming with its own advantages and considerations. As such, here are the most common ones:

• Physical gold: This involves purchasing physical gold in the form of bars or coins from reputable dealers. If you choose this option, ensure the authenticity and purity of the gold before making a purchase;
• Gold exchange-traded funds (ETFs): Gold ETFs are investment funds traded on stock exchanges. They represent physical gold or gold-related assets and offer an easy way to invest in gold without the need for direct ownership or storage;
• Gold mining stocks: Investing in gold mining companies allows you to gain exposure to the gold industry’s potential profits. However, this investment comes with risks related to the company’s performance and other external factors;
• Gold futures and options: These are advanced investment instruments suitable for experienced investors who understand the complexities and risks associated with derivatives trading.

Step 2: Research and select a reputable brokerage firm

The most convenient way to invest in gold in Canada, or any other country for that matter, is through a brokerage platform. Therefore, we suggest looking for ones that offer a wide range of investment options, low transaction fees, and excellent customer service. You should also make sure that the brokerage is registered with relevant regulatory authorities to safeguard your investments.

That said, our go-to brokerage is Interactive Brokers. The reasons are simple—aside from being a platform used worldwide with thousands of investors, IBKR offers:

• Low commissions and financing rates to maximize returns;
• Global access to stocks, futures, cryptocurrencies, bonds, and funds;
• Trading efficiency with advanced technology;
• Secure trading experience.

Step 3: Open and fund your brokerage account

Once you’ve chosen a suitable brokerage firm, you should follow their account opening process. Afterward, fund your account by linking your credit card or other payment option to it with the desired investment amount. Having said that, keep in mind that some brokerage platforms offer commission-free trading for certain gold-related products, making them cost-effective options.

Step 4: Monitor your investments and stay informed

Investing in gold isn’t the last step. In fact, the last one is as important as any of the previously mentioned ones. We strongly recommend keeping track of your gold investments through your brokerage account and staying informed about market trends and economic factors that may influence gold prices. Therefore, regularly review your investment strategy and consider rebalancing your portfolio if needed to align with your financial goals.

Gold price today

The pros and cons of investing in gold in Canada

Although it might sound absurd to some that gold has any cons and that investing in it isn’t just smooth sailing, the reality is different. Just like any other investment, gold has its advantages and disadvantages. You should, hence, be aware of the following:

What to avoid when investing in gold in Canada

Investing in gold, like any other form of investment, comes with inherent risks. However, it is essential to avoid the common mistakes that many novice investors encounter when entering this market. To ensure a successful venture, focus on the following key aspects:

• Overinvesting in gold: As with any investment, overexposure to a single asset, such as gold, can increase risk. Therefore, avoid concentrating all your investments in gold and maintain a diversified portfolio;
• Ignoring storage and security: If you opt for physical gold, do not overlook the importance of secure storage and proper insurance to protect your investment;
• Falling for scams: Be cautious of scams or fraudulent schemes that promise unrealistic returns on gold investments. You should instead stick to reputable dealers and investment options;
• Emotional decision-making: Investment decisions should be based on sound research and analysis, rather than emotional reactions to short-term market movements.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about how to invest in gold in Canada

Is gold a safe investment in Canada?

Gold is generally considered a safe haven asset and can be a valuable addition to a diversified investment portfolio. However, like all investments, it carries some level of risk, and its price can be subject to fluctuations in the global market.

Can I hold physical gold in my retirement account?

Yes, certain retirement accounts in Canada, such as a self-directed RRSP (Registered Retirement Savings Plan) or TFSA (Tax-Free Savings Account), may allow you to hold physical gold or gold ETFs as part of your investment holdings.

Are there tax implications when investing in gold in Canada?

Tax implications vary depending on the type of gold investment and account structure. For instance, gains from physical gold investment may be subject to capital gains tax, while certain gold ETFs may be treated differently for tax purposes. It’s, therefore, advisable to consult a tax professional to understand the specific implications of your situation.

Should I invest in gold mining stocks instead of physical gold?

Investing in gold mining stocks can offer exposure to the gold industry’s potential profits, but it comes with higher risk and volatility compared to owning physical gold or gold ETFs. You should consider your risk tolerance and research the mining companies carefully before making investment decisions.