Investing in Precious Metals: A Guide for Canadians on How to Invest in Gold, Silver, and More

Investing in precious metals like gold and silver is a popular strategy among investors who want to diversify their portfolios and protect themselves against inflation and economic uncertainty. In Canada, there are several ways to invest in these precious metals, including physical ownership, exchange-traded funds (ETFs), mutual funds, and mining stocks. In this blog, we will discuss each of these options in detail and provide information on how to get started.

Physical Ownership of Precious Metals

One of the most straightforward ways to invest in precious metals is to buy physical gold and silver coins or bars. This method of investment has been around for centuries, and it is still popular among investors today. However, buying physical precious metals requires significant upfront capital and comes with risks like theft or damage to the metal.

There are several Canadian bullion dealers that offer gold and silver products, including the Royal Canadian Mint, Kitco Metals, and Canadian Bullion Services. The cost of buying physical gold and silver varies depending on the dealer, but investors should expect to pay a premium over the current spot price of the metal.

Exchange-Traded Funds (ETFs)

Another way to invest in precious metals is through ETFs. ETFs are securities that track the performance of a specific index or commodity, such as gold or silver. In Canada, there are several ETFs that track the price of gold and silver, including:

iShares Gold Bullion ETF (CGL)

iShares Silver Bullion ETF (SVR)

Purpose Gold Bullion Fund (KILO)

Purpose Silver Bullion Fund (SBT)

ETFs provide investors with exposure to the price of gold and silver without the need for physical ownership. They are also more liquid than physical ownership, making it easier to buy and sell the metal. However, investors should be aware that ETFs come with management fees that can erode investment returns over time.

Mutual Funds

Another option for investing in precious metals is through mutual funds. Mutual funds are professionally managed investment vehicles that pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. In Canada, there are several mutual funds that invest in precious metals, including:

Sprott Gold and Precious Minerals Fund

Dynamic Precious Metals Fund

Franklin Gold and Precious Metals Fund

Mutual funds provide investors with exposure to the precious metals industry without the need for physical ownership. However, mutual funds come with management fees, and investors should be aware of the fund’s investment strategy and performance before investing.

Mining Stocks

Investors can also gain exposure to the precious metals industry by investing in mining stocks. Mining stocks are shares of companies that produce or explore gold, silver, or other precious metals. In Canada, there are several mining companies that operate in the precious metals industry, including Barrick Gold, Franco-Nevada, and Wheaton Precious Metals.

Mining stocks provide investors with exposure to the precious metals industry and the potential for capital appreciation. However, mining stocks come with risks like operational and financial risks, and investors should research the company’s financials and management team before investing.

Investing in precious metals can offer diversification benefits and act as a hedge against inflation and economic uncertainty. Canadian investors have several options to invest in precious metals, including physical metals, mutual funds, ETFs, and mining stocks. Each investment option comes with its own set of risks and benefits, and investors should consider their investment objectives, risk tolerance, and time horizon before investing in any asset class. It’s always recommended to consult with a financial advisor before making any investment decisions.

Gold and Silver Shares

Gold and silver stocks are a type of investment that allows Canadians to invest in companies that produce, explore, or mine gold and silver. By investing in gold and silver stocks, Canadians can gain exposure to the prices of these precious metals without having to physically own or store them.

Gold and silver stocks are typically publicly traded on stock exchanges, such as the Toronto Stock Exchange (TSX) or the Canadian Securities Exchange (CSE). There are several gold and silver mining companies listed on these exchanges, including some of the largest gold producers in the world, such as Barrick Gold and Newmont Corporation.

When investing in gold and silver stocks, it is important to consider the performance of the underlying metals, as well as the financial health and growth potential of the issuing company. This can involve researching the company’s management team, financial statements, production rates, and exploration activities.

It is important to note that investing in gold and silver stocks can involve risks, such as the potential for price volatility, changes in government policies, and production and exploration risks. It is recommended that investors do their own research and seek the advice of a financial advisor before investing in gold and silver stocks.

Royal Canadian Mint Exchange Traded Receipts (ETRs)

Royal Canadian Mint Exchange Traded Receipts (ETRs) are a type of investment product that allows Canadians to invest in physical gold bullion through the Royal Canadian Mint (RCM). ETRs are traded on the Toronto Stock Exchange (TSX) and provide investors with an easy and convenient way to gain exposure to the price of gold.

When an investor buys ETRs, they are essentially purchasing a claim on a specific amount of gold held in the RCM’s inventory. Each ETR is backed by 1/10th of an ounce of gold bullion, which is held in the RCM’s secure vaults.

The price of ETRs is tied to the market price of gold, and as such, their value will fluctuate based on changes in the price of gold. ETRs can be bought and sold on the TSX just like any other publicly traded security.

One advantage of ETRs is that they offer investors a way to invest in physical gold without having to actually take possession of the metal. This can be particularly attractive for investors who are concerned about the security and storage costs associated with owning physical gold.

Another advantage of ETRs is that they can be traded easily and quickly, providing investors with a high level of liquidity. This can be beneficial for investors who want to be able to buy and sell their gold holdings quickly and easily.

However, it is important to note that investing in ETRs does come with risks. Like any investment, the value of ETRs can fluctuate based on market conditions and the performance of the underlying asset. Additionally, there may be fees associated with buying and selling ETRs, and investors should carefully consider these costs before making an investment.