10-ounce-Gold-Bar

Apart from the fact that I love it, there’s likely more you need to know about buying and owning gold. It’s one of those things that makes complete sense right up until the point you decide to buy some. Never fear. I, your finance guy, will help you.

How And Where Do You Get The Stuff?

Most places will have what are called bouillon exchanges. You simply go to one, give them your money, get you gold (or silver) and walk out. Easy peasy… seriously. That’s all there is to it.

Where To Keep Gold

The old joke is to buy a bunch of gold and bury it in your backyard somewhere. When the Armageddon clock strikes, you’ll know where it is. It’s actually not a bad idea, keeping it at home. The better idea is to buy yourself a safe and keep it in that. It’s still an asset you want to keep safe and burying it somewhere isn’t exactly the safest thing to do (especially if you forget where you buried it).

One step up from that is to keep it in a deposit box at a bank. It’s much more secure since the bank has its own security. It has a vault, cameras, security guards, and so on. Safety deposit boxes usually run about $40-$50 per year for a small box.

A New And Better Way To Keep It

In 2006, the Canadian government allowed gold to be held as a registered investment, which means you can keep it in your RRSP and, since 2008, in your TFSA as well. It’s a simple process that can help preserve your assets even more, since you can protect yourself from tax. Basically what you do is set up an account with a third party custodian. They will confirm that you actually own the gold and keep track of it, which is unique since most every other investment is intangible. It’s also to ensure that you don’t sell or trade the gold while it’s meant to be in your RRSP or TFSA.

Paper VS Metal Gold

Initially in the 17th century, blacksmiths were the first ones to keep an eye on gold. People bought it from them and they figured they didn’t want to keep it in their homes so they left it with the blacksmith. Of course, you needed a receipt of some kind to make sure you could claim it afterwards. As time went on, blacksmiths noticed that gold wasn’t being traded, or sold very often if at all. They had a bunch of people who had completely forgotten they had gold.

And then they get an ingenious idea: Why not write more receipts?

That’s exactly what they did. People would come along who wanted to buy gold, and like everyone else, they didn’t want to hold on to it. Thus, the gold certificate trade was born. You would think people would wise up and refrain from buying intangible gold in the form of paper… sigh. If there’s one thing about people, it is that we’re stupid. Really, really stupid.

In April 2010, it was reported that Scotiabank, Canada’s largest depositor of gold bullion and distributor of gold certificates, had almost no physical gold in its stores. They had been dealing completely in paper forms of it. No matter how credible an organization may be, always default to buying the physical form of it. The only difference is that in one case, you have it and in the other, you technically don’t. Think about it.

Financial Advisors Don’t Get Paid

Financial Armageddon is upon is. Equities will haunt your portfolios for the next ten years and fixed income assets, as we all know, aren’t as secure as we think they are. So with all this going on, why don’t financial advisors advise you to buy gold (or silver)? The short answer is they don’t get paid to do it. They get paid when you buy mutual funds.

If your financial advisor hasn’t suggested gold (or silver), you want to make sure you do a few things. First, ask them “why not?”. Once you’ve heard their answer — it’ll be weak; trust me — fire them. Then, go on the hunt for a new financial advisor. Once you’ve found one, ask him his thoughts on the markets and how gold (or silver) would fit in. It’s a tough thing to do, since most advisors first go to the people that know them and like them and people in general don’t like to be confrontational and put people, especially their friends, on the spot. However, the old rule of doing business with someone you know and like is deadly in finance. The question you’ve got to ask yourself is how do you qualify that the person you know and like isn’t a complete idiot?

Gold Is A Way… Not THE Way

I love gold. In fact, my entire portfolio is mostly gold. This isn’t a call to action for people to go all in with it though. There are many opportunities to buy great investments out there. But, while we’re at it, I suspect people are on the fence because of familiarity. We always shy away from things that are unfamiliar to us. So, hopefully this will engender some confidence to decide for yourself.