The safe haven?

Sam says she’s had it. “Trump crashed my portfolio. He’s stressing me totally. I’m retiring in three years. I’m out of here.”

So three weeks ago Samantha got rad. She went downtown and bought two kilos of gold.

“Can’t tell you how nervous I was driving home,” she says. “I took some towels to wrap the bars in and hid them under the back seat. But when I got there, I couldn’t stop touching them.”

Seriously. She’s smitten. And reckless.

Gold has advanced in price by close to 30% this year. An ounce is now valued at $3,382 US (it lost about fifty bucks in the last day, or 1.5%). Being priced in American currency, bullion has bounced around even more in loonies as the greenback lost 8% of its value – thanks to the orange guy.

The yellow rocks have advanced as investors questioned the sanity of the American president, the failing wisdom of 19th Century tariffs in a global world, the implications of an international trade war, equity market gyrations and new doubts about the traditional risk-free status of American government bonds.

For centuries, gold has been an asset of last resort, often hoarded within families, passed between generations and considered wearable wealth. Some cultures (think India) consider it to be the only true medium of exchange. Others (think Trump) like to feel rich by making toilets and banister knobs out of it. In recent decades western investors have seen it as a hedge against geopolitical and economic stability. Hence its recent ascent.

But is it a place to put $300,000 worth of retirement savings?

Gold pays no interest. It does not throw off dividends. You can’t sell an ounce over email. Or easily borrow against it. All gains are taxable. And the price is subject not only to currency fluctuations plus supply and demand (it’s a commodity, after all, not a financial asset), but also investor sentiment and human emotion.

Gold costs a premium to buy and a commission to sell. It needs to be securely stored (not under the back seat of your 2004 Nissan), and is subject to loss, theft and damage – unlike your S&P 500 exchange-traded fund.

Of course, the gold sellers make it simple and easy to acquire. And there is incessant pro-rocks chatter among the billions of gold bugs on the planet. They like to quote the golden rule: “He who has the gold makes the rules.”

Buying gold is easy. Selling it, not so much.

Source: Kitco

By the way, what about tax? Lots of folks think because they can carry home a few ounces and keep them in a freezer bag inside the toilet tank the CRA will never know, and not demand a slice when the rocks are turned into cash.

They’re mistaken.

Transactions are recorded by the gold merchants, both buys and sales. Gold coins, wafers and bars come with identifiers, including purity and refiner. The big sellers – Kitco or Scotia, for example – are required to report when bullion changes hands just as they do with the sale of shares in Nvidia or RBC.

All profits are taxable as capital gains – you get to keep 50% and add the rest to your annual taxable income. Not doing so is evasion. Mr. Carney will then hang you upside down by your private parts outside to be licked mercilessly by several Bassett hounds. If you lose money on gold or silver bullion, those losses may be used to offset capital gains.

Now, Sam is gambling that her two lumps of gold will be worth a lot more in three years when her work income ends. There’s no guarantee, of course. Trump will be about to exit, trade wars may be ending, the US$ could be soaring and equity markets celebrating. That would crush bullion.

Moreover, how does Sam turn the rocks into money to buy stuff at Loblaws and Costco?

Right. She has to sell an entire kilo all at once to get any actual cash out of it. If the price sucks on that day, or week or month, she’s SOL. Unlike having a financial portfolio, where a few shares or units can be instantly converted into usable cash, gold investors are trapped inside their rocks.

So there are better alternatives, even if you think Tariff Man is destroying the world as we know it. A gold ETF, for example, is based on bullion prices but is liquid, cashable and convenient. Investors have nothing to store or worry about and can move in and out at will. The ETF holds gold on your behalf with the fees and commissions involved, or sometimes bullion in derivative form. Far more flexible.

Another option is to buy a gold certificate, issued by a company that owns and holds gold, of which you become a partial owner. But there is less liquidity and you still need to work with a gold dealer. Alternatively, buy shares in a gold mining company, like Barrick. This way you might get equity growth as well as dividend income, and you can participate in corporate earnings as well as bullion appreciation. However, owning individual stocks involves risk – sometimes substantial.

So a good option is just to get an ETF holding all of the major stocks traded on Bay Street. Gold and related commodities make up a healthy part of the index – and have done well lately as world trade tensions beat on many other sectors.

In short, Sam needs to decide if she wants financial security or something to fondle. Never an easy choice.

About the picture: “I’m a 30 year old regular reader of the blog,” writes Luke. “My old man, Steve, is a religious reader of the blog, I owe my interest in greater fool, and any semblance of financial literacy to him. I’d love to surprise him with a picture of our old family dog, Barlow. Barlow died in December of 2018. Dad and Barlow were two peas; tall, blonde, and full of joy. He loves Barlow almost as much as loves quoting you word for word at the dinner table. Hope you’ll consider it. Thanks for being one of the good ones.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/05/07/the-safe-haven/