If you’re thinking of buying gold (or silver) as a way to hedge against inflation, deflation, paper currency debasement, and general market uncertainty, you’re at the right place. In this article, we’ll cover the three most popular ways to buy gold in Canada, from best to worst. We’ll also cover the pros and cons of each way.
#1 – Buying physical gold through an RRSP/TFSA
Let’s start with the best strategy first. Many Canadians don’t know that they can buy physical gold and silver bars through a TFSA, RRSP, LIRA, RRIF, RESP or any other savings account. The CRA allows it since 2005 but it hasn’t been promoted at all.
Buying gold through a registered savings account is hands down the best way to invest in gold in Canada as it offers a TAX-FREE way to allocate a portion of your portfolio to gold and silver while benefiting from the lowest premiums above spot. That’s right, if you want the maximum amount of gold “for your buck”, so to speak, using your retirement account to acquire gold bars might be the best way.
Now the next logical question is: where to buy gold through a TFSA or RRSP? This is where it gets tricky, as your financial institution most likely doesn’t offer this service. Banks would rather you buy their “paper gold” instruments such as gold ETFs, gold futures, options, stocks, and certificates. Only a handful of companies in Canada offer PHYSICAL gold and silver bars within an RRSP or TFSA account.
SilverGoldBull is one of the leaders in this space, according to GoldRRSP.ca, a portal that explains to Canadians how to use their retirement accounts to buy gold and silver. Aside from having some of the best reviews out there, SilverGoldBull created a dedicated Gold RRSP/TFSA department that will guide you through the entire process of buying gold through a retirement account, while helping you avoid penalties, costly mistakes, and most importantly: taxes. SilverGoldBull also has some of the lowest premiums over spot for RRSP/TFSA investors. Note: ask them which gold bars are “on special” when you call. Those will carry the lowest premiums. You can learn more at https://goldrrsp.silvergoldbull.ca/
Pros of buying gold through an RRSP/TFSA:
- Own physical gold, not paper gold.
- Best insurance policy against a systemic collapse.
- Pay the lowest premiums
Cons of buying gold through an RRSP/TFSA:
- Gold has to be stored at a vault.
- Harder to liquidate. You cannot sell at the click of a button like then you sell stocks and ETFs. The easiest way to sell your gold back is by contacting the same company you bought from. SilverGoldBull for instance does have a buyback program.
#2 – Buying physical gold from your local gold dealer
Many Canadians like to buy gold locally from their city’s gold dealer, and this is great for those interested in only buying a small quantity of gold or silver coins to hold at home. The reality however is that this isn’t ideal for investors for 3 reasons:
- Local dealers charge higher premiums (they have to!)
- Local dealers have a limited selection of coins and bars
- Local dealers don’t have the expertise to cater to investors who want to diversify their existing portfolio
Also, keep in mind that local dealers don’t generally carry large gold bars. They mostly sell premium coins (numismatics and semi-numismatics) since most of their clients are collectors or recreational gold buyers. Investors that want to allocate a portion of their portfolio to precious metals need to deal with a company that works directly with the mints and can acquire large gold and silver bars of high purity, at the lowest premiums possible.
Pros of buying gold from your local dealer:
- Own physical gold, not paper gold.
- Easy to buy. Just walk in and choose your coins.
- No shipping delays.
- Hold your gold coins at home (although we strongly recommend storing your gold in a secured vault to mitigate the risk of theft/loss.)
Cons of buying gold from your local dealer:
- Higher premiums.
- Limited selection of gold bullion bars (you’ll most likely end up buying premium coins or bars which carry higher premiums).
- Lack of expertise for investors.
- Harder to liquidate, ESPECIALLY if you’re buying premium coins. Ask your dealer about their buyback policy.
#3 – Buying “paper gold” instruments through your bank
Paper gold is a bit of a catchall term that includes all the ways you can get exposure to gold that aren’t physical. This can mean investing in gold exchange-traded funds (ETFs), gold futures, and gold options. As you can imagine, paper gold doesn’t offer nearly the same advantages as owning real physical gold.
If you’re looking for a way to hedge against paper assets, why would you want paper gold? All Canadian banks offer paper gold instruments, and they love selling those to their clients since they can generate those from thin air at the click of a button, but no bank will offer the physical asset.
Meanwhile, central banks worldwide have been acquiring physical gold for decades to diversify their own portfolios. It makes you wonder why they want the physical asset but would rather sell you the paper asset, huh?
Based on all of this, this is the worst way to buy gold for Canadians interested in hedging part of their portfolio against stock market uncertainty and geopolitical risk.
Pros of buying paper gold from your bank:
- Easy to buy and liquidate (click of a button).
- No need to worry about storage since you don’t own anything physical.
Cons of buying paper gold from your bank:
- Gold certificates don’t entitle you to physical gold.
- Gold mining stocks track the stock market more closely than the price of gold.
- Paper gold can easily be confiscated since it’s all digital.
- No real protection from a systemic collapse in the financial system.
Why Buy Gold?
Gold has a long history of performing well in times of crisis. It does well when the dollar doesn’t, and vice versa. This means that gold can offer some much-needed balance in one’s investment portfolio.
People have been using gold and silver as a way to preserve wealth for thousands of years. Virtually every civilization known to man has used precious metals one way or another, gold being the king of metals.
Gold and silver are mentioned in the Bible, Quran, Torah and almost every other holy book. This long track record makes gold the go to hedge in times of economic uncertainty.
While paper currencies and stocks can be created at the click of a button, gold has to be mined, and there is a limited amount of it on our planet, which means that quantities are limited. Gold is needed in many industries, including electronics, healthcare, dentistry, architecture and of course jewelry. For all these reasons, the value of gold can never go to zero.
Top 3 Canadian Gold Companies
If you’re ready to buy gold in Canada, we recommend checking out these 3 companies. They have great reviews, a great selection of coins/bars and some of them even offer an all-in-one service for RRSP/TFSA account holders’
1-(877)-707-4707Largest selection of gold coins and bars.Lowest premiums (ask for their bars on special for maximum savings).260,000+ five-star reviews.Supports RRSP/TFSA accounts.End-to-end, white glove service for retirement investors.For more info on this company, read the SilverGoldBull Review from GoldRRSP.ca
1-(877)-205-1104Forbes Finance Council members.INC 500 company.1,700+ five-star reviews.Supports RRSP/TFSA accounts in Canada and IRA/401k in the US.End-to-end, white glove service for retirement investors.For more info on this company, read the Regal Assets Review from GoldRRSP.ca
1-(888)-312-2288Largest selection of gold coins and bars.Lowest premiums (ask for their bars on special for maximum savings).260,000+ five-star reviews.Supports RRSP/TFSA.End-to-end service for retirement investors.For more info on this company, read the Border Gold Review from GoldRRSP.ca Canadian Gold Buyer’s FAQQ: When is the right time to buy gold?
A: We aren’t financial advisors so we obviously cannot give financial advice. However, many experts say that thereâ’s really no right time to buy gold as no one can predict the future price or when the next recession will hit. Gold is used as an insurance policy against a stock market crash, a recession or a hyperinflation scenario. Many celebrity investors like Kevin O’Leary like to keep a 5% gold allocation in their portfolio at all times, regardless of the price. Ray Dalio advocates for an 8% gold allocation in his ‘All Seasons’ portfolio. Again, do your research and speak to your financial advisor before making any portfolio allocation decision.
Q: Why are gold bars better than gold coins and what are the best types of gold bars to buy?
A: gold bars carry lower premiums which makes them more attractive to investors. Gold coins come with fancy designs and a higher level of luster and detail. That extra work means higher premiums. Investors who care only about the level of purity and the amount of gold content their budget can buy tend to prefer gold bars. Some of the most well-known brands for gold bars are: Credit Suisse, PAMP, Asahi, Johnson Matthey, and Valcambi. All these gold bars are highly pure and are all recognized worldwide. That said, investors who like the idea of ‘collecting’ coins that may become valuable in the future due to their scarcity may accept to pay the higher premiums and go with proof coins instead of bars.
Q: What companies in Canada can help me buy gold through my RRSP or TFSA?
A: Based on our research, SilverGoldBull, Regal Assets and Guildhall Wealth are 3 companies that specialize in helping Canadians use their existing retirement or savings account to acquire physical gold and silver bullion, tax-free, without penalties, and in a CRA-compliant manner.
Q: Can I buy gold online from retailers outside Canada?
A: you can, but it will cost you much more in shipping fees and currency conversion fees. It’s definitely NOT a good idea. You also have to be aware that there are a lot of scammers advertising very low prices, sometimes below spot! If it’s too good to be true, it generally is.
Q: How much gold should I buy to protect my portfolio?
A: once again, we cannot provide financial advice. Speak to your financial advisor before making any investment decision. We can however tell you that many well-known investors, such as Kevin Oâ€™Leary, Ray Dalio, Greg McBride, James Rickards and Frank Holmes like to keep a 5 to 10% gold allocation at all times.
Q: How to choose gold products? Coins or bars?
A: gold bars generally carry lower premiums. Gold coins like the Canadian Maple Leaf, the Austrian Philharmonic or the American Eagle can also be good buys since they are issued from reputable mints and recognized worldwide for their high purity.
Q: Canadian banks like Scotia Bank and TD do advertise for precious metals. Is it good to buy from them?
A: Indeed, both TD and Scotia Bank do now offer physical precious metals, but we don’t recommend buying from them for the following reasons: (1) they will always try to push gold ‘certificates’ over physical bullion (2) they charge higher premiums for bullion and have a limited amount of products, (3) they tend to have horrible customer service (what a shocker for a bank huh?), (4) they don’t have an all-in-one RRSP/TFSA valet service like SilverGoldBull, Guildhall Wealth or Regal Assets do. (5) If you want to buy gold to diversify and protect your portfolio from the banking system and economic uncertainty, why would you want a bank to hold your metals? Remember that when buying through a retirement account, you cannot hold your metals at home, so you will need them to be held by either a bank or an accredited depository like IDS or Brinks Canada. GoldRRSP.ca did an in-depth analysis of all service providers, including banks, in Canada and came to the same conclusion regarding banks. Best to avoid.
Q: where should I store my gold bars?
A: if you are working with a Gold RRSP/TFSA provider like SilverGoldBull or Regal Assets, they will offer you a few options since they work directly with reputable vaults like IDS or Brinks Canada. It is generally best to store at the location closest to you to minimize shipping costs when you want to take possession of your metals. Some vaults also offer the option of picking up your metals yourself.