This has prompted fears of a stock market crash, prompting many Canadians to never consider owning precious metals to wonder if the ancient asset should be part of their portfolio. After all, Canada’s largest robo-advisor, Wealth Simple, allocates 2.5% of its client accounts to gold and 10% in its halal portfolio.
Should it be part of you? Or are you just buying at the peak? Except in hindsight, there is no way to know. There will always be a “gold bug” that urges you to sell everything in the world and buy gold. It is best to avoid their advice.
Instead, here are some important facts about investing in gold that can help you make more informative decisions.
Why does gold attach so much importance to it?
Gold is used in a wide range of products such as jewelry, dental fillers and electronics, but most products are stored in vaults only in the form of gold bars. Like money itself or cryptocurrency, gold is valuable because people have decided to be. But unlike the other two, it is not affected by manipulation.
As of early 2025, all the world’s exquisite gold is estimated to be 216,265 tons, worth an astonishing $21.5 trillion. Mines around the world have poured another 3,661 tons in 2024. Therefore, the supply of gold is increasing, but slowly. And there is almost no one who can change that.
Why do investors buy gold in Canada?
As an investment, gold is classified as a commodity. That is, it is a standardized and graded substance that conducts transactions worldwide. However, unlike soy or Brent crude, you can store meaningful gold in a jewelry drawer or safe. It is also uniquely indestructible; part of its appeal in ancient times was the fact that it was not corrosive like other metals. So you can hold it indefinitely.
If you invest gold, you won’t generate any income; it will only drop in value based on supply and demand. In the long run, its prices tend to track inflation rates.
Most importantly, gold has a history of value and exchange units. Many central banks still hold it to help stabilize their currency. In developing countries such as India and China, many people think it is more trustworthy than paper or electronic funds. That’s why it continues to have privileges in its portfolio.
