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How to Buy Gold and Become a Savvy Precious Metals Investor?

TD SECURITIES

How to Buy Gold and Become a Savvy Precious Metals Investor?

AUG 2023

Many savvy Canadian retail investors protect and grow their hard-earned investment portfolios by diversifying with precious metals, such as physical gold. These wise investors prosper during good economic times and use precious metals to preserve their purchasing power during turbulent times.

After reading this guide, you will gain the confidence and necessary insights to diversify your investment portfolio with precious metals such as gold bullion.

Canadian gold bullion investors have benefited from a 372% return on the price of gold during the macro bull market from 2005 to 20221.

In the next two decades, many gold bullion investors are primed to protect and grow their wealth in the following ways:

  • Reduce overall risk by diversifying within the commodities asset class.
  • Gold has traditionally been considered a good hedge against inflation.
  • Mitigate potential losses if equity and real estate markets decline.
  • Preserve their purchasing power with strategic bullion investments.

We wrote this gold bullion investment guide because we understand that a wealthier future for you and your family is important to you. Do not feel intimidated if you have never invested in physical gold. By the end of this guide, you should have a better understanding of the following:



There are several ways to invest in Gold in Canada. You may buy and take ownership of physical gold, such as gold bars or coins. Gold bars and coins with a minimum purity of 99.5% gold are also known as gold bullion.

You can purchase gold bullion products online from various gold dealers across Canada, including some major Canadian banks. TD offers their clients a discount (2) when they purchase gold bullion with their TD bank account with the option to store it safely in a fully insured vaulted facility via TD Secure Storage.

You could also invest in gold ETFs, ETRs, gold company shares, mutual funds and futures contracts. Some of these financial instruments track the price of gold, while others invest in the companies that mine gold.

TD Wealth offers gold certificates that allow you to own gold without taking possession of actual bars or coins.

Gold bullion is physical high-purity gold minted into bars, coins or rounds. Investment-grade gold bullion should have a minimum purity of 99.5%.

An example of a high-purity gold bullion bar is the 1 oz. TD Gold Bar, which contains 99.99% pure gold. The popular 1 oz Gold Maple Leaf Coin (2023) has the same high purity level of 99.99%.

Gold is a unique commodity with a rich history as a trusted store of value for thousands of years. You should consider the following reasons for investing in physical gold:

  • The price of gold has increased by 372% in Canadian dollars from the beginning of 2005 to the end of 20222. Gold has traditionally been considered a good hedge against inflation, especially when global currencies continue to be debased and the money supply increases.
  • Gold has historically protected portfolios during macroeconomic and geopolitical uncertainty.
  • The Dow to gold ratio can determine when gold is undervalued and overvalued relative to the stock market3. The ratio stands at 18 as of February 2023, which means it requires 18 ounces of gold to buy a single share of the Dow. Over the last 150 years, this ratio has typically trended below 10. This means gold is potentially undervalued relative to the Dow.
  • Annual gold mining production has declined in recent decades, which could place pressure on the available future supply.
  • Gold is often negatively correlated with other assets, making it an attractive portfolio diversification option.
  • Since physical gold bullion is a tangible asset, it avoids counterparty risk where a 3rd party may default on its contractual obligations.

You can purchase gold bullion products from small independent dealers, the Canadian Mint or a large trusted institutional dealer, such as a major Canadian Bank.

We strongly recommend selecting a reputable dealer registered with the Royal Canadian Mint as a BULLION DNA™ Dealer. These bullion dealers have access to anti-counterfeiting technology offered through the Canadian Mint.

TD Canada Trust is a proud member of this bullion dealer program.

Many savvy investors understand the value of purchasing gold bullion products from a major Canadian bank.

Here are the benefits if you choose to invest through TD:

  • You will have peace of mind that you are buying from a regulated and respected major financial institution with over 1000 branches across Canada.
  • You won’t have to worry about verifying the authenticity of physical gold held by small 3rd party dealers when you buy online or in person from a trusted financial institution.
  • You can place an order online, at a local branch or purchase immediately at one of the 12 TD foreign exchange centres across Canada.
  • If you feel uncomfortable having your gold bullion delivered to your front door, you can pick it up from your local branch.
  • Selling your gold bullion products back to TD Bank is an easy process using the same receipt you received when you purchased the products.
  • TD also offers a gold bullion storage option to store your bullion investments in a secure vault.
  • TD has a strong IT infrastructure to ensure your personal information is safe and highly secure4.
  • You can also purchase gold bullion products using your existing TD account.

You may want to avoid taking delivery of your hard-earned gold bullion investments and risk storing it under your mattress or inside a wall. Many savvy investors use TD Secure Storage to store their gold bullion investments in a high-security vault. This gives them confidence and peace of mind when investing in precious metals.

What are the benefits of storing your gold bullion with a trusted financial institution like TD?

  • Your physical gold investment will be stored safely in a high-security professional bullion vault.
  • The gold will be allocated, meaning you will be the legal owner, and TD will act as your investment custodian.
  • You will have the option to take delivery or sell back to TD at your local branch.
  • Your bullion bars and coins will be fully insured5.

Verifying the authenticity of your gold bullion bars and coins is especially important when purchasing from a small 3rd party dealer instead of a trusted financial institution.

Here are a few standard tests you can perform:

  • Check your gold coins thickness, diameter and weight against their published specifications.
  • Check the unique engravings on your gold coin or bar to see if it matches the marks from the mint where it was produced.
  • Authentic gold will make a ping sound when tapped with another metal.

Gold Maple Leaf coins dated 2014 and later include The Royal Canadian Mint’s Bullion DNA technology as a cutting-edge visual authentication method.

TD Precious Metals leverages its close partnership with the Royal Canadian Mint and other major mints worldwide when sourcing gold bullion products directly from these mints. We understand that investors like yourself rely on these safeguards for peace of mind that your hard-earned wealth will be preserved.

Gold bullion products must contain a minimum of 99.5% pure gold to be considered investment grade.

As an example, the 1 oz. TD Gold Bar contains 99.99% gold. It is labelled as .9999 and sometimes referred to as “four nines“ fine, which means there are 9999 parts pure gold per ten thousand parts metal in the bar. Fine gold of such high purity is also denoted as 24 karats.

The gold spot price is the current price of one troy ounce of gold for immediate delivery. A troy ounce equals roughly 31.1035 grams.

The Gold Price in Canada page offers insights into how the gold spot price has trended in the short (last 3 months) and long-term (10 years+).

The gold bullion market is very liquid, meaning it’s easy to sell to certified bullion dealers. If you purchase and store your bullion investments with TD Secure Storage, selling back to TD is just a few clicks away.

TD Canada Trust customers can sell their physical precious metals at any TD Branch. TD offers competitive pricing based on live market rates for gold.

After reading this gold bullion investment guide, we hope you are well on your way to becoming a savvy investor who understands the value of precious metals within the commodities asset class.

Leverage the insights from this guide when buying gold with confidence from a trusted gold bullion retailer. Consider browsing the high-purity investment-grade gold bullion products offered by TD Precious Metals.



Sources:

  1. Gold Spot Price – TD Precious Metals https://preciousmetals.td.com/shop/en/tdmetals/charts/gold-price -set chart range to MAX to view historical prices used in average annual return calculation
  2. View and compare TD Customer Pricing with Non-TD pricing by selecting a specific product: (https://preciousmetals.td.com/shop/en/tdmetals/golds). TD Pricing is valid when you pay using a TD bank account.
  3. Dow to Gold Ratio – 100 Year Historical Chart https://www.macrotrends.net/1378/dow-to-gold-ratio-100-year-historical-chart
  4. TD Privacy and Security https://www.td.com/ca/en/about-td/privacy-and-security/how-we-protect-you/online-security
  5. We insure your precious metals holdings up to replacement value. This is not CDIC insurance.
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