How to Invest in Gold in Canada
By Enguerrand Sueur | 
Fact-checked by Julien Brault | Published on 05 Jan 2024
Investing in gold allows for diversification of one’s portfolio, protection against inflation, and safeguarding of assets during recessions. Therefore, it’s not surprising that many Canadian investors are interested in it. However, unlike stocks or bonds, gold is a physical material, and investors who wish to acquire it will need to decide how they want to add gold to their portfolio. Here are the main ways to invest in gold and how to proceed.
Buy physical gold from the Royal Canadian Mint
You can also purchase gold bullions and coins directly from the Royal Canadian Mint’s online store, but there is a daily purchase limit. The Mint produces several 99.99% pure gold coins ranging from one gram to one ounce. Surf on the Mint’s website to find gold coins in your price range. Their gold products prices range from $288.88 to $99,500.00.
To take possession of your gold, you can have it delivered to your home within 5 to 7 days. Delivery may take a while longer. For example, most coins in stock are delivered one week from the time of purchase but it can take several weeks if you order a new product. Shipping is free as soon as you spend $100.
Buy physical gold from Canadian Banks
Without a doubt, the most obvious way to invest in gold is to buy physical gold. In Canada, the major Canadian banks are the main bullion retailers. Gold and other precious metals are exempt from GST and HST.
You can buy gold from TD Bank stamped with a TD symbol. All TD precious metals can be purchased online, in branch and at a TD Foreign Exchange Centre. Prices are a bit lower for TD clients. Shipping is free on all physical metal delivery orders of $100.00 and over.
TD Secure Storage allows you to store your gold in a secure vault facility. There is a fee of $1.25 per ounce per month and a minimum account fee $9.95/month. All gold products stored via TD Secure Storage are fully insured based on current market value.
If you order a gold bar from CIBC, you’ll need to create an account online, then pay and wait for the free delivery directly to your home. Delivery is scheduled for 5 to 7 business dayss but could take up to 2 to 9 weeks. Storage facilities are not available at CIBC, but Safety Deposit Boxes are available for rent at most branches. A safety deposit box at CIBC costs between $60 and $400 per year according to size. If you only own a small amount of golf, the smaller box should be enough.
The challenges of buying physical gold
If you buy physical gold, you will face two challenges:
First, where will you put it for safekeeping? You probably don’t want to stash four pounds of gold under your mattress. If you go foward stocking your gold at home, you should insure your gold to protect yourself against theft or natural disaster. This can add to the cost of your homeowners insurance. You can also rent a safe from certain banks like TD and CIBC mentioned above, but also other banks like RBC for an annual fee of $50 to $500 depending on the space required.
Second, there is the problem of resale. Indeed, it is not as easy to resell a 1 kg bar as it is to sell an ETF replicating the price of gold. To overcome this challenge, you can go to the major banks’ regional resale centres or a branch. For example, you can go to a CIBC branch and fill out a form. You’ll need to present the original receipt and verify that the product is in perfect condition.
How to invest in physical gold… without taking delivery
If you have no desire to store gold at home, there are two alternatives available to you. First are precious metal certificates, which you can buy from your bank. Gold certificates are issued to investors as proof of ownership of gold stored by a bank. For example, RBC offers certificates through its RBC Wealth Management division. You can buy directly from RBC through your RBC Dominion Securities investment account, and RBC will hold your gold. CIBC also offers e-certificates through CIBC Investor’s Edge, Wood Gundy, or at a branch. You will receive a title deed by email upon purchase. As for resale, your certificate may be resold at market value.
Secondly, you can get Exchange Trading Receipts (ETRs), which are title deeds that entitle you to a certain amount of gold held by the Royal Canadian Mint, a crown corporation. ETRs are therefore a way to buy gold guaranteed by a government institution. Their facilities are located in Ottawa and Winnipeg.
While a gold Exchange Traded Fund offers you a portion of a trust that invests in gold, ETRs guarantee you a real portion of gold. Moreover, you can take delivery of the gold to which your ETRs give entitlement, or you can resell the title if you prefer cash. Exchange Trading Receipts (ETRs) trade on the Toronto Stock Exchange as Royal Canadian Mint CDN Gold Reserves, whose ticker symbol is MNT. You can buy ETRs through an online brokerage account or an investment advisor.
[Offer productType=”BrokerageAccount” api_id=”5f53d4e34d1911503113cafb”]How to invest in gold company shares in Canada
If you are interested in investing in gold, you can also invest in gold companies stocks through a Canadian online brokerage. In fact, these companies’ stock prices tend to follow the price of gold, which is logical since they are dependent on the evolution of the price of gold; selling gold is their main source of income. Moreover, unlike gold bullion, mining companies typically pay dividends to their shareholders. There are two types of gold companies: mining companies and royalty companies.
Royalty companies provide financing to mining companies with the capital needed to build a mine once a deposit has been identified. Afterwards, the royalty companies collect a percentage of the gold extracted from the mines they’ve financed. Royalty companies can also buy gold from mining companies at a very favourable price. Thus, royalty companies don’t have significant operating costs. Besides, they take less risk because they don’t explore and are more diversified because they can finance multiple mines at the same time.
| Royalty company | Ticker |
| Franco-Nevada | FNV |
| Wheaton Precious Metals | WPM |
| Osisko Gold Royalties | OR |
Among royalty companies, we can cite Toronto’s Franco-Nevada, which has the largest market capitalization of the royalty companies, or Vancouver’s Wheaton Precious Metals. Royalty companies provide many advantages for investors, and these benefits are reflected in their share prices.
The mining companies, for their part, manage gold mining and marketing. Many Canadian mining companies fall into this category, including Barrick Gold, Eldorado Gold Corporation, SSR Mining, Alamos Gold and Agnico Eagle.
The advantage of mining companies is that they can potentially generate better returns than royalty companies by doing everything themselves, including exploration, extraction and marketing. Of course, investing in a gold mining company is riskier than investing in gold or a royalty company, since their prices are not influenced solely by the value of gold. In fact, just like any other company, a mining company can face many factors affecting its profits, in addition to the stock price of gold.
| Mining company | Ticker |
| Barrick Gold | ABX |
| Agnico Eagle | AEM |
| B2Gold Corp | BTO |
| Newmont Mining | NGT |
| Argonaut Gold | AR |
| Yamana Gold | YRI |
| Karora Resources | KRR |
| Kinross Gold | K |
| Centerra Gold | CG |
| Alamos Gold | AGI |
When comparing mining companies, it’s worth looking at dividends paid in the past, as well as traditional financial ratios like the price-to-earnings ratio, the price-to-book ratio, the price-to-sales ratio, etc. Lastly, an interesting piece of information is the cost of extraction per ounce or kilogram. This makes it possible to determine the company’s competitiveness compared to its peers, as well as to better understand the risk associated with its operations. In fact, the higher the cost of extracting a mine, the more vulnerable it is to a drop in the price of gold. If the price of gold drops below the mining company’s cost of extracting, it goes without saying that it will face some serious difficulties…
Investing in gold-focused ETFs
ETFs are a simple way of investing in a variety of products. Here’s how to invest in gold ETFs in Canada. Overall, there are two types of gold-based exchange-traded funds (ETFs). Some try to reproduce the price of gold and others invest in mining.
When you purchase shares of an ETF that replicates the price of gold, your investment directly corresponds to beneficial ownership in a fraction of gold held in trust in a vault. In Canada, there is the iShares Gold Bullion ETF, Sprott Physical Gold Trust and Purpose Gold Bullion Fund.
Any ETF manager charges you a management expense ratio (MER). This is the percentage fee deducted annually from your investment for their services. Gold ETFs often charge a significantly higher MER than regular index ETFs do. This means that it is an important element to consider when selecting the gold ETF you will invest in. Another thing to remember is currency fluctuation. Some gold ETFs come in currency-hedged and unhedged versions. If the ETF is unhedged, fluctuations in the USD-CAD exchange rate will add additional volatility.
| ETF name | Ticker | MER |
| iShares Gold Bullion ETF | CGL | 0.55% |
| Sprott Physical Gold Trust | PHYS | 0.41% |
| Purpose Gold Bullion Fund | KILO | 0.23% |
The second category of gold-focused ETFs invests in gold mining companies, whose stocks are exposed to the price of gold. Such an approach makes it possible to profit from the rise in the price of gold while investing in companies that can also generate a return and pay a dividend from their operations.
For example, investing in the Canadian iShares S&P/TSX Global Gold Index ETF enables you to invest in the largest gold mining companies in the world. BMO’s Equal Weight Global Gold Index ETF may also be interesting. For those who would like to add covered call options to their portfolio, Horizons Gold Producer Equity Covered Call ETF will be more attractive. Those looking to take more risk to get a higher return potential could opt for a Canadian ETF investing in junior mining, such as the BMO Junior Gold ETF.
| ETF name | Ticker | MER |
| BMO Equal Weight Global Gold Index ETF | ZGD | 0.60% |
| BMO Junior Gold Index ETF | ZJG | 0.61% |
| iShares S&P/TSX Global Gold Index ETF | XGD | 0.61% |
| Horizons Gold Producer Equity Covered Call ETF | GLCC | 0.79% |
| Horizons Gold Yield ETF | HGY | 0.90% |
| CI First Assets Gold+ Giants Covered Call ETF | CGXF | 0.71% |
Investing in gold futures
For more seasoned investors, futures contracts, which you can purchase by opening a margin account with an online broker, are an attractive option. A gold futures contract commits you to purchase a certain amount of gold at a predetermined price, at a future date called maturity. Maturities range for example from 1 to 3 months and the typical quantity of gold is generally 100 oz. per contract. If the price of gold exceeds the price of your futures contract, you can pocket your profit by reselling your contracts. Be aware, however, that you will have to resell your contracts before they mature, otherwise you will be required to purchase physical gold.
There an ETF for almost everything. So yes, you can buy gold futures via Horizons Gold ETF (HUG), which aims to replicate the performance of the Soloactive Gold Front Month MD Rolling Futures Index.
Top online brokers to invest in gold
Many online brokers let you trade gold products for free or for a very small fee. These platforms are dedicated to independent investors and do not offer financial advice on how to manage your portfolio.
Qtrade
Qtrade has built up a reputation for providing fast and efficient customer service over the years, while providing a low-cost experience for the independent investor. Qtrade gives you the ability to buy or sell 100 ETFs for free. On other transactions, there is a base commission of $8.75 per transaction.
Wealthsimple Trade
Allowing you to trade stocks and ETFs without any brokerage commissions, Wealthsimple Trade has a very attractive fee structure. No transaction fees, no commissions, no annual fees and no account maintenance fees. The app is user-friendly and easy to use for beginners.
Questrade Trading
If you’re interested in more than stocks and ETFs, Questrade Trading‘s offer is more complete. There is a minimum commission of $4.95 and a maximum of $9.95 per trade, but buying ETFs is free. Also, Questrade Global can be used to trade on the foreign exchange market (Forex) and on the precious metals market, from around 15 international stock exchanges.
BMO InvestorLine
Big banks also want to stay in the game! The BMO InvestorLine Self-Directed trading platform offers registered (TFSA, RRSP, RESP, RRIF) and non-registered accounts, all with no minimum balance. You can invest in stocks, ETFs, options, bonds, GICs and mutual funds. There is, however, a flat-fee of $9.95 per trade. They do offer 80 commission-free ETFs, but no gold ETF is part of their list.
The path to wealth is paved in gold
To sum it up, there are many ways to invest in gold. Therefore, if you are interested in physically owning gold because you want to invest in a tangible asset, gold in the form of coins or bars is a good solution. If you want a less burdensome investment solution than physical gold due to storage, you can consider the precious metal certificates offered by major Canadian banks. Finally, if you don’t mind not owning a tangible asset, you can invest through an online broker in gold stocks, gold-focused ETFs, or gold futures.
