Scotia Bank recently launched an online store selling a limited selection of gold and silver bullion products. The eStore carries Scotiabank gold bars, Maple Leaf gold coins from the Royal Canadian Mint, Scotiabank silver bars and silver maple leafs and will deliver its products to anywhere in Canada. While it is innovative for a big bank to sell bullion through an online store, smaller retailers such as Vancouver-based J & M have been selling bullion by mail order for many years now. A quick comparison between J & M and ScotiaMocatta shows that the latter is a pricier way to buy bullion:

  1. Precious metal products, which are exempt from GST, are subject to sales tax in many provinces but not in BC. As a Vancouver-based retailer J & M does not charge sales tax on pure bullion products but ScotiaMocatta does based on the buyer’s province of residence. An Ontario resident buying an 1 ounce Maple Leaf gold coin could save close to a $100 by buying through J & M.
  2. J & M’s prices on the same bullion products appear to be cheaper than ScotiaMocatta’s. Recently, J & M quoted $1,132 on an 1 ounce Maple Leaf gold coin and $1,106 on an 1 ounce gold bar compared to ScotiaMocatta’s price of $1,173 and $1,121 respectively.
  3. J & M charges a 2% fee only when paying through a credit card but they also accept bank drafts and direct deposits at no extra charge. ScotiaMocatta, on the other hand, charges an administration fee of 3% plus $12 on all orders.

Add it all up and you could save as much as $200 extra when buying an 1 ounce Maple Leaf priced at around $1,000 through J & M instead of ScotiaMocatta.

Note: I have no affiliations with J & M. I have simply purchased bullion from them in the past without any problems.

This article has 23 comments

  1. I believe that all bullion sales are exempt from GST whichever province you are in. I do know that Ontario charges PST on coin sales which is why I generally recommend the 1oz bar in preference to Maples. That being said I have heard it said that the PST can be claimed back due to Maples being classed as bullion, I have not checked, buying the bars is less hassle.

  2. Welcome back CC

    If Scotia starts selling canned goods and shotguns the same way it is now selling gold coins, now that would be something.

  3. Technically, you should be paying Ontario PST on it anyway. Stores in Ontario provide the convenient service of collecting the PST for you, but you’re supposed to voluntarily pay the PST on your out-of-province purchases. Not that anyone is likely to come after you for it, but I suppose if the amount became large enough…

    • Canadian Capitalist

      @FlookiiDuke: Agree. I don’t invest in gold but if I did, I’d buy gold bars because the spreads are smaller than gold coins from the Royal Canadian Mint.

      @Rob: It’s good to be back. You can tell gold fever is on when big banks start selling bullion products online…

      @Winston: Hmmm… I didn’t know that. I wonder how many people keep track and remit PST on their out-of-province purchases.

  4. So really, it’s not the actual price of the gold that’s different, but the fees, and taxes.

    https://online.kitco.com/bullion/products_ca_2.html

    Kitco is another, but lists at the higher Scotia price for 1oz. but say say “For Canadian orders, there is no applicable sales tax on bars and/or coins that are 24 Karat. “

  5. Canadian Capitalist

    @Jon: Scotia’s prices on the product itself are also higher. I obtained quotes from both J&M and Scotia at the same time towards the end of Sept. As I note in the post, for an 1-ounce Maple Leaf, J & M quoted $1,132 compared to $1,1,73 at Scotia. An 1-ounce gold bar costs $1,106 at J & M and $1,121 at Scotia.

  6. @CC: Scotia includes a ‘bar charge’ on a per ounce basis starting at $14 for the 1oz gold bar. This is apparently a fabrication charge (http://www.scotiamocatta.com/products/bullion.htm). It’s a dubious charge at best as the same bars are traded again and again and I would be willing to bet these bars get passed out to the next owner without so much as a wipe down with a damp cloth.

    During my transactions with them I have calculated that they also quote prices approx 1%-2% higher when buying and a similar amount lower when selling than the prevailing spot market price. I have asked how they calculate their prices and have been told that the information is not available to the public.

    On top of this a ‘commission’ is charged per transaction ($12-$20 in my experience). What this is for I have no idea as I would have thought that the customer had been shafted enough by then.

    This applies to both Gold and Silver.

    This doesn’t include any currency conversion fees (all transactions are quoted in USD) if you pay in CAD. Scotia’s exchange rates are the most expensive of the big banks. Also if you order your precious metals at a Scotia branch they will charge you a delivery fee of approx $20.

    If you are going to use Scotia and are in the GTA then you are better off going to the main branch on King St and buying your bullion over the counter with USD. This will keep some of the costs down. I have been happy with my transactions with Scotia (despite the costs) and like the immediacy of trading over-the-counter.

    I will however be checking out J&M if Gold ever becomes affordable again.

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  10. I guess this is one way to jump into the Gold market before it approaches 2000? Learning something new every day. Thanks!

    Mike

  11. Honestly, I don’t really see the reason behind this launch. With the ETF’s that are available that track gold such as GLD (US) and HUG (CAD), it just seems like a lot of fees without much reason to do it.

  12. @IntelligentSpectulator, it’s a matter of trust. If you hold a piece of paper that says ‘I promise to pay the bearer 1oz of gold’ then you trust the person or institution backing that promise to deliver the underlying asset. Holding physical Gold and Silver removes the element of risk that the paper backer reneges on that promise.

  13. @FlookiiDuke – Well actually a fund like GLD owns actual gold and it is held by a 3rd party, I’d say that is as good with less costs (scalable)

  14. @IntelligentSpectulator, do some research on GLD and SLV. You will find that many well respected analysts in the the precious metals markets have their doubts on whether these fund actually have the metal on hand.

    Also if the fund holds bullion with a 3rd party that is a another layer of risk added between the holder of GLD and the actual asset.

    GLD is great for trading but if you are looking for a store of value to hold for an extended period you cannot beat physical metal from a risk stand point. Sure you pay a premium for the reduced risk profile but it’s one I’m willing to pay to know that my investment is not in a ponzi scheme.

    In case you wanted to do a little more research:

    http://www.gata.org/
    http://www.investmentrarities.com/tbarchives.shtml

  15. If you really want an easy way to hold Gold and Silver I would suggest the Central Fund of Canada (CEF – http://www.centralfund.com/). Traded on both NYSE and TSX.

    Physical bullion held in CIBC vaults and specifically allocated to CEF (http://www.bullionvault.com/help/Definitions/definition_unallocated.htm). Independently audited twice a year if memory serves me correct. Not something that either GLD or SLV appears to do.

  16. I agree that holding physical bullion is a 100 times better then any gold stock or ETF, gold has been going up and gold stocks coming down..what gives? stocks are overpriced and at this point they will just keep on a decline..slow and steady, before you know it, your gold stock lost 30% of its value if you dont pay attention.

  17. @FlookiiDuke – actually, not sure if you have read the prospectus but HSBC holds the gold on behalf of GLD, and it is audited by BNY.

    I think it’s actually safer over there than in most placer where I would hold it. And it just seems like a lot of fees involved in buying, shipping, etc, etc.. And when you sell it, how good is the market, how liquid is it?

  18. @Boko

    Just took a look at the returns of both this year..

    Physical gold is up 20,4%
    GLD is up 19,9% (after fees)

    When you consider the costs involved of holding physical gold (illiquid, shipping, spreads, where you hold it, insurance if you keep it at home, etc, etc)… there is such a small difference, I would say that it’s not worth the hassle to own physical gold in my opinion…

  19. @FlookiiDuke – by the way, just checked and GLD has the same semiannual audits, look here:

    http://www.spdrgoldshares.com/sites/us/faqs/

    answer #14…. did my research:)

  20. @IntelligentSpectulator, did you know that HSBC holds the second largest COMEX short position in Gold and Silver after JPM?

    If they are short that means they don’t own Gold themselves to sell, I would wonder who’s Gold they are selling?

    Again it’s down to trust, I don’t trust the big banks that are in bed with the central banks. Gold is their enemy, it reflects their governments debasement of the fiat currencies. It is the ability to print money that gives government it’s power to implement the stealthiest tax of all, inflation. None of this action can be hidden from Gold which is why I am taken to believe in the manipulation of the precious metals markets by central banks and their agents to suppress the price of Gold and Silver to artificially prop up their fiat currencies.

    So for me there is no substitute for physical for long term holding. When the big banks get caught on the wrong side of the trade that is when you will see the paper market for Gold collapse and physical rise like a phoenix from the flames.

    Hey maybe I have been sucked in by the conspiracy theorists but I sleep well at night knowing I own my Gold. That being said I do presently have a small position in ‘paper’ metals (not GLD) just to protect my un-invested USD from devaluation while I look for other opportunities (as you said, the liquidity is better in paper).

    At the end of the day both physical and paper are valid vehicles for investment after you have weighed your own risk tolerance and trading/investment strategy.

    I think the point Boko is getting at is that Gold stocks (Miners not ETFs tracking physical) tend to be more volatile than the price of Gold it’s self (although I could be wrong about that).

  21. once again Bankster screwing the buying public When will this abomination cease.

  22. Scotia Bank through its gold marketing agency has historicly charged a processing fee of about $150 to $200 per ounce on their gold bullion sales. In Alberta there is no sales tax and there is no GST charged on Gold purchases. Therefore Alberta is the only place you can purchase bullion tax free. There are many bullion sales outlets in Alberta that charge only $25.oz servicing fee. After 100 ozs. that charge drops to $10/oz. You have to look around to find the deals, my best results are with jewellers who on a given day will sell cheaper than the posted price and buy with a tiny discount on the days valuation.

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