Gold reached a record high of US$4,379 per ounce in October. At the time, we published a comprehensive guide on how investors can gain exposure to gold. The central conclusion was simple: for most investors seeking portfolio diversification, owning gold through an exchange-traded product (ETP) — whether an exchange-traded fund (ETF), closed-end fund (CEF), or exchange-traded receipt (ETR) — is usually more accessible and cost-effective than buying from a physical precious metals dealer.
Since that guide was published, Wealthsimple introduced direct physical gold trading inside its brokerage. The rollout attracted attention, in part because the company ran a promotional giveaway of a one-kilogram bar, ten one-ounce coins, and fifty one-tenth-ounce coins for qualifying clients. The promotion ended on December 5.
Wealthsimple has a track record of introducing consumer-friendly features ahead of traditional banks, from zero-commission options trading to direct indexing. Adding physical gold trading to its platform is another example of that strategy. But beyond the headlines, it’s worth examining how the product actually works and how it compares economically with established gold ETPs.
Wealthsimple physical gold trading explained
Wealthsimple’s offering is not a stock or a fund. When you buy through the platform, you acquire a fractional, Canadian-dollar–denominated digital interest in physical gold reserves. The allocated bullion is stored at the Royal Canadian Mint and Brinks and is held “at the program level on a segregated basis.” In other words, your allocation is held in trust with other clients’ allocations and kept separate from Wealthsimple’s corporate assets.
The product is available in Wealthsimple’s self-directed accounts, including registered plans and non-registered taxable accounts. Trades settle at CAD spot prices, and Wealthsimple charges a 1% transaction fee on both buys and sells. That makes an immediate buy-and-sell round trip effectively a 2% cost. There is no recurring storage fee, and trading is available 24/7, similar to Wealthsimple’s crypto platform.
Physical redemption is more restrictive and costly. Only non-registered accounts are eligible for physical delivery. Redeeming a one-ounce coin carries a 2.25% fee, while a one-tenth-ounce coin redemption costs 11%. Those redemption fees cover minting, insurance, and delivery; fulfillment is arranged through Silver Gold Bull, a large online bullion dealer. If your objective is to take physical possession, the per-ounce economics improve when redeeming larger units instead of small denominations.
Wealthsimple physical gold vs. gold ETPs
Major gold ETPs are generally cheaper to trade and hold over short and medium time horizons. To compare costs, it’s helpful to look at three Canadian-listed gold vehicles that provide physical redemption options: the Purpose Gold Bullion Fund (KILO), the Sprott Physical Gold Trust (PHYS), and Canadian Gold Reserves (MNT).
A practical way to approximate total ownership cost is to combine a product’s management expense ratio (MER) with its recent median bid–ask spread. That gives a reasonable estimate of the cost to buy and hold the product without selling immediately.
KILO is among the most cost-efficient. It carries a 0.28% MER. At the December 12 market close it traded with a $61.88 bid and a $62.00 ask, implying a $0.12 spread, or roughly 0.19%. Compared with Wealthsimple’s 1% upfront fee, KILO is cheaper for roughly the first three years of holding; only after that horizon does avoiding an annual MER begin to offset the higher entry fee charged by Wealthsimple.
PHYS has a higher MER of 0.39%. On the same date it showed a $45.18 bid and a $45.40 ask, a $0.22 spread or about 0.49%. In this instance, Wealthsimple’s 1% fee breaks even sooner but still only after roughly 1.3 years of holding.
MNT falls between those MERs at 0.35% but suffers from notably higher trading costs due to lower liquidity. On December 12 it quoted a bid of $64.29 and an ask of $65.00 — a $0.71 spread or approximately 1.10%. In MNT’s case, Wealthsimple’s upfront fee can be cheaper immediately, even before accounting for MNT’s ongoing MER.
Overall, Wealthsimple’s physical gold product is not the lowest-cost option for short holding periods. Low-MER ETPs such as KILO and PHYS tend to be cheaper for investors with short to medium horizons. Wealthsimple becomes more economically competitive over longer holds, because it charges no ongoing storage or management fee. MNT is an exception where wide bid–ask spreads can make Wealthsimple the more attractive entry option right away.
Redemption and taking delivery
If your intention is to convert a Wealthsimple digital gold position into physical bullion, the redemption process is straightforward: submit a request in the app and Wealthsimple arranges insured courier delivery, typically within seven to ten business days. By contrast, ETP redemptions are more restrictive and often require very large minimums.
KILO allows redemptions only in one-kilogram increments. For perspective, Silver Gold Bull’s price for a one-kilogram bar was roughly $193,631 CAD at the time referenced, placing that option beyond the reach of most retail investors.
PHYS requires holdings sufficient to correspond to a standard London Good Delivery bar — around 400 troy ounces — which represents a very large capital commitment.
MNT offers more redemption formats but still imposes significant thresholds: one-ounce Maple Leaf coins in groups of 10, kilobars of about 32.15 troy ounces, or London Good Delivery bars ranging roughly 350 to 430 troy ounces. Practically speaking, that means physical delivery through these ETPs is best suited to higher-net-worth investors.
That is where Wealthsimple’s proposition stands apart. Despite a 2.25% fee for a one-ounce coin and an 11% fee for a one-tenth-ounce coin, Wealthsimple is the most accessible way for a retail investor to convert a brokerage-held gold position into physical bullion and have it delivered to their door within about a week. If you plan to redeem, factor in the redemption fees and ensure you have a secure storage plan.
What investors should consider
From a practical perspective, if your aim is simply to diversify a traditional stock-and-bond portfolio, the most sensible approach is usually to buy a low-cost gold ETP and hold it. It’s cheaper and easier to manage. If you want to own physical bullion for its tangible benefits, dealing directly with a reputable local bullion dealer can be a better path than using a brokerage platform.
As an example from the market mentioned earlier, a local dealer listed one-ounce gold coin buy and sell prices that implied a spread of roughly 3.4%. That spread is not insignificant, but when you factor in Wealthsimple’s 1% trading fee plus redemption charges, local dealers can be competitive for buyers taking immediate physical possession.
In short: decide whether convenience, low ongoing costs, or holding a physical coin matters most to you. Research the alternatives, compare fees and redemption rules, and choose the option that aligns with your goals and time horizon.
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